City of Culver City, California
Agenda Item Report
RECOMMENDATION:
Staff recommends the City Council (1) receive and file the Fiscal Year 2014/2015 Mid-
Year Budget Monitoring Report, (2) receive and file the General Fund Financial
Forecast, (3) provide notification inviting public comment and input for the upcoming
Proposed Budget for Fiscal Year 2015/2016, and (4) approve related budget
amendments.
A budget amendment requires a 4/5
ths
vote.
BACKGROUND / DISCUSSION:
Mid-Year and Forecast Reports
The attached Mid-Year Budget Monitoring Report (Mid-Year Report) presents the City
Council with a snapshot of General Fund, Enterprise Fund, and Internal Service Fund
expenditures and revenues through the first half of Fiscal Year 2014/2015, which
began on July 1, 2014. Other City funds are performing within expectations and are
not a part of this report. The attached General Fund Financial Forecast (Forecast)
takes the mid-year projections and forecasts revenues and expenditures out to Fiscal
Year 2023/2024. The Forecast provides details of the various assumptions used to
arrive at the revenue and expenditure estimates.
Meeting Date: 02/23/15 Item Number: A-3
CITY COUNCIL AGENDA ITEM: FOUR-FIFTHS VOTE REQUIREMENT – (1) Receipt
and Filing of the Fiscal Year 2014/2015 Mid-Year General Fund Budget Monitoring
Report, (2) Receipt and Filing of the General Fund Financial Forecast, (3) Provide
Notification Inviting Public Comment and Input for the Upcoming Proposed Budget
for Fiscal Year 2015/2016, and (4) Approval of Proposed Budget Amendments.
Contact Person/Dept.: Jeff Muir, CFO,
Finance Department
Phone Number: (310) 253-5865
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Public Hearing: [] Action Item: [X] Attachments: [X]
Public Notification: (Email) Meetings and Agendas – City Council (02/17/15); (Email)
Ongoing Topics – Fiscal and Budget Issues (02/17/15)
Department Approval:
Jeff Muir (02/17/15)
City Attorney Approval:
Carol Schwab (by H. Baker) (02/17/15)
Chief Financial Officer Approval:
Jeff Muir (02/17/14)
City Manager Approval:
John M. Nachbar (02/17/15) City of Culver City, California
Agenda Item Report
Notification Inviting Public Comment and Input
Consistent with the City Council’s general policy, the City is committed to being open
and transparent in all matters, especially those involving the collection and
expenditure of public funds. In order to continue this commitment, the public is being
provided this first of several opportunities to comment and offer input on the City’s
upcoming FY 2015/2016 proposed budget.
The City Manager’s Proposed Budget for Fiscal Year 2015/2016 is scheduled to be
formally presented to the City Council on Monday, May 11, 2015. Prior to this date,
there will an additional public comment opportunities currently scheduled for the end
of March, and opportunities during the period when the City Council discusses the
proposed budget with City staff in May and June.
In addition to the public comment opportunities, consistent with the City Council’s
direction, the City’s Commissions, Committees, and Board (CCB) will all have several
opportunities to provide comment and input on the budget process. The first of these
opportunities begin with the CCB’s meetings in March.
Should the City Council adopt the proposed resolution, the City Clerk’s Office will also
provide several public notices related to the opportunities of the public to provide input
an comment on the budget process over the coming weeks.
The public is also invited to submit comments and suggestions to the City at the
following e-mail address: Budget.Priorities@culvercity.org.
FISCAL ANALYSIS:
The Mid-Year Report provides detail into General Fund revenues received and
expenditures disbursed through December 31, 2014, as well as adjusted projections
through the end of the Fiscal Year (to June 30, 2015). General Fund expenditures
through December 31, 2014 are $41.322 million, or 43.1% of current revised budget
projections. General Fund operating revenues through December 31, 2014 are
$33.81 million, or 36.5% of current revised budget projections. Significant one-time
revenues for the sale of property have also been received and total $14.2 million. Both
General Fund operating revenues and expenditures are higher when compared to this
same point in time in the prior fiscal year.
Full year General Fund projections for Fiscal Year 2014/2015 show total estimated
operating revenues at $95.624 million, $3.06 more than the current revised budget
total. Total expenditures are estimated at $93.91 million, $2.06 less than the current City of Culver City, California
Agenda Item Report
budget. The projected ending result for the General Fund is an operating surplus of
$1.7 million.
As recommended by the Finance Advisory Committee, the Forecast has been
expanded out through Fiscal Year 2023/2024 in order to show the effect of Measure
Y ending in March 2023. The Forecast predicts operating surpluses for the next
several years, but shows that expenditures will catch up to revenues by Fiscal Year
2022/2023. The final year of the Forecast shows a deficit of approximately $11 million
if Measure Y does sunset in March 2023.
Generally, revenues are projected to increase by an average of 2.4% annually, with
continued gradual growth in the economy. The Forecast does not make any
assumption for another recession during this time. The Forecast also assumes the
same staffing levels approved for Fiscal Year 2014/2015 stay in place. For budgetary
purposes, cost-of-living adjustments for both safety and non-safety employees are
assumed at 2.0% per year. Significant increases to pension costs are assumed based
on the latest actuarial information provided by CalPERS. For the most part, other
expenditure categories are assumed to grow at an average 2.2% inflationary rate.
Further details are provided in the Forecast document.
Several factors must be considered when reviewing the Forecast:
? A number of developments, both private and former Redevelopment Agency
projects, are assumed to come ‘on line’ during the course of this projection.
? Measure Y, which is estimated to provide slightly over $11 million per year in
General Fund revenues by the end of the Forecast, sunsets on March 31, 2023.
Staff will make a presentation of the report and also discuss in more detail future policy
discussions on whether and how to use General Fund reserves in excess of the 30%
Contingency Reserve.
ATTACHMENTS:
Attachment 1 – Fiscal Year 2014/2015 Mid-Year Budget Monitoring Report
Attachment 2 – Proposed Budget Amendments
Attachment 3 – General Fund Financial Forecast
MOTION:
That the City Council: City of Culver City, California
Agenda Item Report
(1) Receive and file the Fiscal 2014/2015 Mid-Year Report as provided in
Attachment 1; and,
(2) Receive and file the General Fund Financial Forecast as provided in
Attachment 3; and,
(3) Provide notification to public inviting comment and input for the upcoming
Proposed Budget for Fiscal Year 2015/2016; and,
(4) Approve the Budget Amendments as proposed in Attachment 2.
A budget amendment requires a 4/5
ths
vote.
MEETING DATE: February 23, 2015
AGENDA ITEM: (1) Receipt and Filing of the Fiscal Year 2014-2015 Mid-Year
General Fund Budget Monitoring Report, (2) Receipt and Filing
of the General Fund Financial Forecast, (3) Provide Notification
to Public Inviting Comment and Input for the Upcoming
Proposed Budget for Fiscal Year 2015/2016, and (4) Approval
of Proposed Budget Amendments.
ATTACHMENTS
Pages
1. Culver City Mid-Year Budget Report 2 – 12
2. Recommended Adjustments by Line Item 13 – 16
3. General Fund Financial Forecast 17 – 67
City of Culver City
MID-YEAR BUDGET REPORT
FISCAL YEAR 2014-15
Through December 31, 2014
2
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31
INTRODUCTION
This Mid-Year Budget Report presents an overview of the City’s operating revenues and expenditures
for the first half of Fiscal Year 2014-15 as compared to budgeted amounts, explaining any notable
aberrations or trends in the numbers. The revenue and expenditure information in this report is
organized into two sections: General Fund and Other Major Funds.
An important component to the ongoing management of the City’s annual budget process, the Mid-
Year Budget Report’s purpose is threefold. First, it illustrates the City’s focus on monitoring its revenues
and expenditures, with the intent to proactively respond to unanticipated changes or emerging trends.
Secondly, and equally important, the report is to provide fiscal transparency of City finances as the City
is ultimately accountable to its residents for the use of revenue. Finally, an important reason to provide
such information is that it serves as a starting point for preparing the FY 2015-16 Budget.
The close of December encompasses the first six months of the City’s fiscal year, presenting an ideal
point of analysis to determine the viability of the adopted budget, or if and where adjustments should
be considered. The Finance Department staff has reviewed all line items and compared actual results
against budget expectations, historical trends, seasonality and other known factors affecting either
revenue or spending streams to determine if recommendations for reductions or increases should be
made. As the defined mid-point of the fiscal year, although the presumed expectation is that most
categories should be at 50%, City revenues historically lag expenditures at this point in the fiscal year
because of year-end accounting adjustments to major revenues and because the bulk of the property
tax and business licenses revenues are received later in the fiscal year.
REPORT HIGHLIGHTS:
? The City’s one half cent Measure Y – Sales Tax remains strong, and is expected to come in
slightly higher than original projections. The year-end revenue total is projected at $8.6 million.
? The City’s overall general fund operating revenues are above expectations for the first half of FY
2014-15. General Fund Operating Revenues through December are $33.81 million, or 8.2%
higher than the same period last year. Not included in this amount is one-time revenue of $14.2
million for sale of properties. Analysis suggests the City’s overall recurring General Fund
revenues are expected to outpace the current revised budget total for the fiscal year. It is
therefore recommended that budget amounts for recurring operating revenues be
increased by $3.114 million, and one-time revenues be increased by $14.2 million.
? General Fund Expenditures through December total $41.322 million, or 1.0% lower than the
same period last year. Higher personnel vacancies during the first six months of the fiscal year
compared to the prior year are the main reason for this lower amount. Vacancies will be slightly
lower during the 2
nd
half of the fiscal year, mainly due to current Police Recruits enrolled in the
academy that will ultimately fill vacant safety positions.
? A brief mid-year overview is included in this report for Enterprise Funds and Internal Service
Funds, both of which appear to be operating within expectations.
The following pages present the detailed discussion of the City’s Mid-Year actual results and
recommendations by revenue and expenditure categories.
42
GENERAL FUND
GENERAL FUND REVENUES
At the time of the Fiscal Year 2014-15 Adopted Budget, it was estimated that revenues would slightly
exceed FY 2013-14 levels, with overall increases attributable to increased Sales Tax and TOT receipts
along with an increase in development related revenues. This estimate marked the second year where
recurring revenues would cover ongoing expenditures. As of the December 31, 2014, General Fund
operating revenues are displaying continued growth, exceeding estimated revenues with receipts
totaling $33.81 million, or 36.5% of the current revised revenue budget at the close of the 2
nd
quarter.
This percentage is less than the 50% one would presume as the mid-year total due to payments
received in July and/or August for many of the major revenue categories such as sales tax, utility taxes,
property tax, transient occupancy tax and business tax being accrued back to the prior fiscal year.
Recurring receipts (not including the land sale) through December 2014 are $2.5 million, or 8.2%,
higher than the same period last year, with increases largely driven by Sales Tax, Transient Occupancy
Tax, and Utility User Taxes. One-time revenues were received for the sale of properties totaling $14.2
million. These properties are the Pacific Theaters and the former Fire Station #3 property on Segrell
Way.
The table below displays the comparison between revenues received as of December 31
st
for the
current and prior fiscal year:
53
? Property Tax – As of the close of the 2
nd
Quarter, the City has received $1.71 million in Property
Tax, which is 13.4% higher than this point last year. Last year’s annual total included a residual
payment from the Successor Agency that is not expected to recur this year. Property Tax is
currently on track to end the year at the current projection, excluding any further residual
payments from the Successor Agency.
? Sales Tax – Sales Tax receipts as of current mid-year exceed prior year mid-year totals by
13.2%. Only 27.1% of the budgeted revenues have been received because at this point in the
fiscal year only four months of receipts have been recorded. In accordance with government
accounting standards, sales tax revenues received in July and August are moved back to the
prior fiscal year because the actual transactions took place in the prior year. It is recommended
to increase Sales Tax receipts by approximately $328,000.
? Sales Tax - Measure Y – In the November 2012 election, Culver City voters approved a sales
tax increase which went into effect in April 2013. The City is on track to surpass the current
revised budgeted total of $8.304 million in Measure – Y revenue. It is recommended to increase
this category by approximately $136,000.
2013-14
REVENUE AS OF
12/31/2013
2013-14
REVENUE
TOTAL
2014-15
REVENUE AS OF
12/31/2014
2014-15
REVISED
BUDGET TOTAL
PROJECTED
REVENUES
2014-15
Property Tax 1,507,560 $ 5,447,052 $ 1,709,222 $ 4,428,000 $ 4,428,000 $
Sales Tax 4,629,416 18,817,179 5,238,233 19,302,825 19,631,000
Sales Tax - Measure Y 1,818,944 8,189,558 2,510,648 8,304,000 8,440,000
Public Safety Sales Tax (PSAF) 163,715 429,102 140,358 359,000 359,000
Business Tax 475,437 11,214,234 743,727 11,000,000 11,200,000
Franchise Tax 326,349 1,449,956 317,849 1,370,000 1,400,000
Real Property Transfer Tax 794,318 1,861,564 1,837,226 1,500,000 2,750,000
Electricity UUT 3,054,192 6,266,653 3,461,124 6,283,000 6,433,000
Gas UUT 315,678 1,040,876 318,579 979,000 1,035,000
Water UUT 824,001 1,728,841 700,209 1,326,000 1,400,000
Telecomm UUT 2,080,599 5,000,907 2,219,956 5,040,000 5,040,000
Cable UUT 282,811 802,597 329,402 882,000 882,000
Transient Occupancy Tax (TOT) 2,389,493 5,608,151 2,826,914 5,408,000 5,600,000
Commercial/Industrial Dev. Tax 709,654 884,591 430,273 450,000 600,000
Licenses and Permits 2,084,016 3,632,898 1,569,495 3,174,000 3,077,000
Intergovernmental 33,425 3,893,140 84,417 3,835,825 3,993,000
Charges for Services 3,825,005 8,083,168 3,759,238 7,179,335 7,752,000
Fines and Forfeitures 1,796,424 4,162,444 1,645,504 3,707,000 3,850,000
Use of Money & Property 544,593 1,555,285 1,009,554 1,585,700 1,461,000
Interfund Revenues 1,938,003 3,875,980 1,722,787 3,895,574 3,895,574
Transfers In 1,541,615 2,699,989 1,082,611 2,165,222 2,062,222
Other Revenues 127,728 588,181 14,350,435 390,360 14,535,000
31,262,975 $ 97,232,344 $ 48,007,759 $ 92,564,841 $ 109,823,796 $
GENERAL FUND REVENUES
64
It is important to note in the upcoming years, the additional revenue generated from the Measure-
Y Sales Tax will be instrumental in helping to balance the City’s budget. However, the sales tax
increase sunsets in nine years (March 31, 2023); so unless extended the additional revenue
does not fully address the City’s structural deficit. As communicated in the General Fund
Financial Forecast: FY 2015-16 - FY 2021-22 Report, the City must continue to manage
revenues in an efficient and sustainable manner, and control expenses accordingly in order to
continue progress toward long-term fiscal health.
? Business Tax – Business Tax renewals are due by the end of February. Receipts in this
category for FY 13-14 were $1 million higher than FY 12-13. Business Tax receipts are
anticipated to remain at approximately the FY 13-14 level for this fiscal year. It is recommended
to increase this category by $200,000.
? Utility Users Taxes (UUT) – Most Utility Users Taxes are outperforming revenues received
compared with the same period last year. In accordance with the same accounting standards
that apply to sales tax receipts, UUT receipts in July are moved back to the prior fiscal year, so
at this point in the year only five months of receipts have been recorded. With accrual
calculations taken into account, receipts have grown in all UUT areas with the exception of Water
UUT, which is lagging slightly behind last year at his time. Water UUT is performing lower than
the same levels last year, but it is anticipated to come in slightly higher than projections by the
end of the year.
It is recommended that the Electricity UUT projection be increased by $150,000; Gas UUT
increased by $56,000; and Water UUT by $74,000. These increases align with growth rates as
noted for each UUT area.
? Transient Occupancy Tax (TOT) – In April 2012, Culver City voters approved a measure to
increase the Transient Occupancy Tax (TOT) from 12% to 14%. Due to increased occupancy
rates coupled with the higher tax rates, current year receipts are $2,826,914 or 18.3% higher
than this point last year.
In accordance with the same accounting standards that apply to UUT receipts, receipts in July
are moved back to the prior year, so at this point in the year five months of receipts have been
recorded. Based on the growth in receipts, it is recommended that the TOT budget be increased
by $192,000.
? Real Property Transfer Tax – Real Property Transfer Tax is difficult to predict as it relies on
high value property sales, which fluctuate tremendously from month to month. At this point in
the fiscal year, receipts are more than twice the amount they were at this point last year due to
some large commercial property transactions. To account for this large increase, it is
recommended to increase Real Property Transfer Tax by $1.25 million for FY 14-15. It is
important to note, though, that large receipts in this category are mainly considered one-time
revenue and not recurring.
? Commercial/Industrial Development Tax – Compared to last year, Commercial/Industrial
Development Tax receipts are about 40% lower than last year. Receipts through December 31
st
have almost met the adopted budget amount, and it is recommended that the budget for
Commercial/Industrial Development Tax be increased by $150,000.
75
? Licenses & Permits – Like the Commercial/Industrial Development Tax, Licenses and Permits
revenue is driven by residential and commercial construction activity. Mid-year revenues total
$1.569 million which accounts for 49.5% of the adopted budget total. This is approximately 25%
lower than the same point last year. It is recommended that the budget for Licenses and Permits
be decreased by $97,000.
? Intergovernmental Revenue – Intergovernmental revenue is mostly comprised of the motor
vehicle license fees from the State Department of Motor Vehicles. The majority of this revenue
is received in January and May. It is recommended to increase this category by $157,175.
? Charges for Services – The Charges for Services category is comprised of a variety of
revenues ranging from recreation fees to police services and plan checks. Recreation related
fees and room rentals have performed better than anticipated, along with plan check fees and
film parking. It is recommended that the overall Charges for Services category be increased by
$572,665.
? Fines and Forfeitures – Fines and Forfeitures category is primarily comprised of red light
camera violations and moving violations written by Culver City traffic enforcement, and parking
violations written by Culver City parking enforcement. Current year revenue is lower than this
point last year by $150,000. Current projections, though, show this category coming in slightly
higher than the adopted budget. It is recommended that Fines & Forfeitures budget be increased
by $143,000.
? Use of Money and Property – Use of Money and Property includes interest income and income
from the rental of city property. It is recommended to decrease this category by $124,700.
? Other Revenues – Other Revenues is comprised of loan payments, land sale proceeds,
donations and miscellaneous revenues. The City received proceeds for the Pacific Theaters
($12.95 million) sale to the City, and sale of the property at the old Fire Station #3 location on
Segrell Way ($1.25 million). It is recommended to increase this category by approximately
$14.14 million to account for these sales of properties and adjustments to some smaller donation
accounts.
The recommended Mid-Year revenue adjustments total $17.26 million in increases above the current
revised budget. Of this amount, increased recurring revenues total $3.06 million, and one-time revenue
totals $14.2 million.
86
GENERAL FUND EXPENDITURES
Overall, General Fund expenditures through mid-year are $41.32 million or 43.1% of projected
appropriations, which is slightly lower when compared to this point last fiscal year.
The table below provides a comparison between the first six months of Fiscal Year 2014-15 and Fiscal
Year 2013-14:
Total expenditures are $409,000 lower than this point last year. This is mainly attributable to higher
position vacancies through the first six months of the year compared to last year. The mid-year
expended average for Departments is 43.06% of budgeted expenditures. No departments are currently
over the 50% mark at mid-year, but a few are estimated to fall above the FY 14-15 revised budget at
year end, based on labor agreements approved after the adopted budget. For departments with few
to no vacancies and O & M costs that should be fully realized for the year, these salary and benefit
increases will place them slightly above the adopted budget amount. The departments currently
anticipated to be above the revised budget are Administration, City Attorney, and Finance Department.
Based on the number of vacancies and spending trends, it is projected that the current year General
Fund expenditures will total $93.91 million. This is $2.06 million lower than the Adjusted Budget and
2.8% higher than the total expenditures last fiscal year. The increase from last year is mainly due to
employee bargaining group MOU changes, employer paid retirement increases, and an increased
contribution to the retiree health prefunding trust fund.
2013-14
EXPENDITURE AS
OF 12/31/2013
2013-14
EXPENDITURE
TOTAL
2014-15
EXPENDITURE AS
OF 12/31/2014
2014-15
REVISED
BUDGET TOTAL
2014-15
PROJECTED
EXPENDITURES
ADMINISTRATION 619,256 1,345,339 690,970 1,503,635 1,535,570
CITY CLERK 137,789 413,668 128,522 346,201 288,400
CITY ATTORNEY 830,117 1,900,806 849,910 1,988,970 2,066,700
FINANCE 2,064,735 4,847,722 2,118,766 4,748,668 4,785,000
HUMAN RESOURCES 565,881 1,134,826 477,345 1,141,174 1,097,855
INFORMATION TECH. 1,564,094 2,971,770 1,579,225 3,374,642 3,108,500
PARKS, REC. & COMMUNITY SVCS 3,114,876 6,857,433 3,346,775 7,458,437 7,212,200
POLICE DEPARTMENT 14,272,215 32,422,023 13,774,932 32,547,059 32,051,000
FIRE DEPARTMENT 8,089,380 18,076,429 8,177,443 19,098,560 18,687,000
COMMUNITY DEVELOPMENT 2,610,543 5,819,648 2,744,966 6,955,317 6,344,000
PUBLIC WORKS 4,343,088 9,517,136 4,493,980 10,317,715 10,108,000
NON-DEPARTMENTAL 1,500,983 3,452,100 1,740,882 4,108,693 4,256,234
Transfers 2,017,525 2,571,696 1,198,081 2,384,766 2,369,766
TOTAL EXPENDITURES 41,730,483 91,330,595 41,321,796 95,973,837 93,910,225
GENERAL FUND EXPENDITURES
97
OTHER MAJOR FUNDS
A brief overview follows for the City’s Enterprise and Internal Service Funds.
ENTERPRISE FUNDS
The City has three Enterprise Funds: Refuse, Transportation, and Sewer, which account for the
provision of direct services to the general public where all or a substantial portion of the costs involved
are paid in the form of user charges or fees for such services.
? Refuse Disposal Fund was established to account for the operation of the City's refuse
disposal, transfer station operation, recycling efforts, and street sweeping services.
? Transportation Fund is used to account for the operation, as well as the capital assets,
of the City's Municipal Bus Lines. Other funding assistance comes from FTA Section 9
(Federal-Capital), TDA and STA (Capital and Operating), and Proposition A and
Proposition C.
? Sewer Fund is used to account for revenues collected through sewer charge fees and
sewer facilities charges. These funds are used for expenditures related to the operation
and maintenance of sewer disposal facilities, capital projects, and debt service on bonds
for sewer facility improvements.
At mid-year, the Refuse Fund operating expenditures are $5.616 million, or 44.3% of adjusted budget
appropriations. This is 2.7% ahead of expenditures at this time last year. A contributing factor to the
low overall mid-year expenditure percentage is Refuse Disposal Fees being less than anticipated
(29.9% of budget). Personnel costs are at 47.5% of budget at mid-year, and are expected to come in
slightly below projections. The overall projected year-end expenditures are expected to come in at
approximately 96.3% of the revised budget.
Refuse Disposal Fee receipts at mid-year are $1.36 million, or 39.2% of budgeted revenues. The
payment from the County of Los Angeles for Refuse Fees that brings us to the half-way point has been
recorded in January. Bin Service and Tonnage Charges are recorded at higher than 50% on average
at mid-year and are driven by increased home improvement and development activity. Overall Refuse
Fund revenues are on track and are expected to be fully realized at fiscal year-end.
The Transportation Fund mid-year expenditures are $9.99 million, or 29.2% of adjusted budget
appropriations. This is approximately 0.7% ahead of expenditures at this time last year.
The Transportation Fund currently has $9.8 million appropriated for capital outlay items. As of mid-
year, less than 0.01% of these funds have been expended. Projects in this category include: Bus
Signal Priority; Line 6 Rapid Bus Signal Priority and Furnishings – Sepulveda Corridor; Real-time Bus
Arrival Information Project; Bus Stop Improvement Program; Bus Wash Rebuild; and CNG Station
Compressor project. Capital projects not implemented or finished during a fiscal year are carried over
to subsequent fiscal years.
Transportation Fund revenues are $7.01 million or 25.3% of projected receipts. Much of this revenue
will be received once expenditures for capital items are expended. Transportation Fund revenues are
mostly a combination of Federal, State and Local funding sources along with farebox revenues.
108
Mid-year Sewer Fund operating expenditures are approximately $3.86 million, or 37% of adjusted
budget appropriations. The low expenditure percentage at mid-year is mostly due to a lower than
estimated payment to the City of Los Angeles for the Hyperion Treatment Plant. Personnel costs are
at 46.7% of revised projections.
Sewer Fund revenues at mid-year are $3.76 million, or 40% of budget. Sewer operating receipts from
property taxes have been recorded in January, which brings the receipts to 50.1% of budgeted
revenues. Sewer Fund revenues are also on track to be fully realized at fiscal year-end.
INTERNAL SERVICE FUNDS
The Internal Service Funds are used to account for services and commodities furnished by designated
funds of the City to user departments of the City.
? Equipment Replacement Fund is used to hold annual replacement payments from
designated user departments and to use those funds to purchase equipment for general
City purposes.
? Equipment Maintenance & Fleet Services (EMFS) Fund accounts for all activities of
the City's central equipment maintenance operations, the costs of which are distributed
among designated user departments.
? Self-Insurance Fund receives and disburses funds pertaining to the public liability and
workers' compensation insurance programs. It also funds the Employee Disability (IOD)
program for employee long-term work-related disabilities.
? Central Stores accounts for the timely purchase of needed materials, supplies and auto
parts in advance of actual need. Departments are billed as items are issued for use.
At mid-year, Equipment Replacement Fund actual expenditures are $263,600, or 9.6% of adjusted
budget appropriations. Currently there is $1.01 million encumbered for vehicles/equipment set to be
received in the next few months. The total revised budget appropriation amount of $2.75 million is
projected to be expended by year end for the City Council approved vehicle/equipment purchases for
FY 2014-15.
Equipment Replacement revenues, which are the contributions from the various funds for replacement
costs, will be fully recognized at year-end. These are recorded on a monthly basis, and at mid-year
are 50.0% of budget.
The EMFS Fund mid-year expenditures are $3.51 million, or 45.9% of adjusted budget appropriations.
The low percentage is mostly due to fuel expenditures in the amount of $623,800 being 38.4% of
revised budget appropriations at mid-year.
EMFS Fund revenues are on track to be fully realized at fiscal year-end. All expenditures will be
covered to ensure this Fund continues to operate in a financially sound manner.
The Self-Insurance Fund (SIF) expenditures at mid-year are $3.69 million, or 62.8% of adjusted budget
appropriations. This is 3.0% lower than this time last year. Expenses for claims and liability are
recorded in the first six months of the year, which increases the mid-year percentage.
119
Personnel expenditures are significantly down at mid-year at $428,700, or 52.3% of adjusted budget
appropriations. At this point last year, personnel expenditures were $304,000. The increase is mainly
due to a higher number of injured-on-duty (IOD) incidents in FY 2014-15. Insurance premiums are
slightly higher than the adjusted budget appropriations, but overall expenditures are projected to be
within adjusted budget appropriations at year-end.
Revenues for the SIF Fund are on track and will be fully realized at fiscal year-end.
The Central Stores Fund operations continue to be on track for FY 2014-15. Continued streamlining
of purchasing practices and policies has enabled the City to save time and money by centralizing
various purchases.
CONCLUSION
General Fund projections for Fiscal Year 2014-15 show total estimated revenues at $109.824 million,
$17.26 million more than the current revised budget total. Operating revenues total $95.624 million
and one-time revenues are $14.2 million. Total expenditures are estimated at $93.91 million, $2.06
million less than the revised budget. Estimated improvements to operating revenues and modest
expenditure savings are expected to result in a $1.7 million operating surplus for the year. Additionally,
$14.2 million in one-time revenues for property sales has been realized and will add to reserves. The
addition of these surpluses will be added to the reserves pursuant to the City’s financial policies.
The number of General Fund revenue budget increases can be assumed as indication of Culver City’s
rebounding economy. This Mid-Year Budget Monitoring Report illustrates sustained year-over-year
growth in building activity, higher occupancy rates at hotels, rising property values, and increased retail
sales. As with the last fiscal year, these signs of progress, however, come following years of fiscal
challenges and distress. Continued monitoring of resources is yet a priority to ensure adequate funding
for City services, public facilities, and infrastructure necessary to meet the community’s present and
future needs. This report should be considered in conjunction with the General Fund Financial
Forecast, which takes a longer-term view of the City’s financial position.
12 2014-15 MID-YEAR REPORT
ATTACHMENT 2
DESCRIPTION AMOUNT
EXPENDITURES - GENERAL FUND
Increase to appropriations in Non-Departmental - Utilities to cover increased electricity rates per from
SCE (10116100.513000) 185,000 $
Increase to Non-Departmental Appropriated Reserves (10116100.910200) 100,000 $
Transfer to Successor Agency to cover necessary expenses such as legal fees and audit services
(10116100.952550) 341,500 $
Increase to appropriations to cover ActiveNet fees for recreation programs (10130100.520210) 40,000 $
Increase to appropriations for additional security services at Veterans Auditorium (10130110.619800) 13,000 $
Increase Contributions to Other Agencies to fund agreement with CCUSD for use of facilities
(10130200.517500) (Amount covers arrearages for two prior years) 9,100 $
Increase to Part-time Salaries for Parks & Playgrounds Programs (10130211.411200) 3,200 $
Increase to Part-time Salaries for Rec & Enrichment Programs (10130212.411200) 10,000 $
Increase to Part-time Salaries for Youth Center Programs (10130260.411200) 25,000 $
Increase to Part-time Salaries for Sr. & Social Services to staff Sr. Center fitness room
(10130400.411200) (Off set by billing to Sr. Center Assn. for this staff coverage [see revenue increase
below]) 22,500 $
Increase to Overtime for Police Department to correctly account for Transit Security Program
(10140200.411310) 100,000 $
Increase Departmental Special Equipment in Engineering Division for purchase of portable radar trailer
(10160150.732120) (Funds transferred in from Parking Meter Maintenance Fund 421) 22,000 $
TOTAL GENERAL FUND EXPENDITURE CHANGES 871,300 $
EXPENDITURES - OTHER FUNDS
Reduce incorrect appropriation of Regular Salaries for this account (41430902.411100) (15,000) $
Increase to Departmental Special Supplies for Transportation to correctly reflect initial budget request
(20370200.514100) 48,000 $
Increase to Conference & Conventions for Transportation to correctly reflect initial budget request
(20370200.516500) 9,850 $
TOTAL OTHER FUND EXPENDITURE CHANGES 42,850 $
DESCRIPTION AMOUNT
REVENUES - GENERAL FUND
Decrease Passport Processing Fee budget due to lower than projected revenues from restructuring of
program (10111100.353100) (30,000) $
Increase Sales Tax budget due to higher than projected revenues (10116100.313000) 328,175 $
MID-YEAR RECOMMENDED EXPENDITURE CHANGES
MID-YEAR RECOMMENDED REVENUE CHANGES
13 2014-15 MID-YEAR REPORT
ATTACHMENT 2
DESCRIPTION AMOUNT
Increase Sales Tax-Measure Y budget due to higher than projected revenues (10116100.313020) 136,000 $
Increase Comm Industrial Develop Tax budget due to increased construction activity during first six
months of the fiscal year (10116100.319000) 150,000 $
Increase Utilities budget due to higher than projected revenues (10116100.325000) 10,000 $
Increase SB90 Mandates budget to reflect actual receipts received (10116100.343000) 46,383 $
Increase State Motor Vehicle License Fee In-Lieu budget due to anticipated revenues at year end
(10116100.345010) 89,175 $
Increase P-Card Incentive Program budget to reflect current activity (10116100.370610) 2,500 $
Increase City Hall-P1 Parking to reflect current monthly revenue activity (10116100.371560) 20,000 $
Decrease Pacific Theater revenues to reflect actual receipts for the year (10116100.383170) (240,954) $
Increase Land Sale Proceeds budget due to actual receipts from property sales (10116100.386350) 14,214,806 $
Decrease Transfer-In from Landscape Maintenance Fund (10116100.391425) (124,832) $
Increase Transfer-In from Parking Meter Maintenance fund for purchase of equipment
(10116100.391421) 22,000 $
Increase UUT-Electricity budget due to higher than projected revenues (10114400.312100) 150,000 $
Increase UUT-Gas budget due to higher than projected revenues (10114400.312110) 56,000 $
Increase UUT-Water budget due to higher than projected revenues (10114400.312120) 74,000 $
Increase Business License Fee budget to reflect activity equal to last fiscal year (10114400.315110) 200,000 $
Increase Transient Occupancy Tax budget due to increased taxes and growth in receipts
(10114400.318000) 192,000 $
Increase Franchise Tax budget due to higher than projected revenues (10114400.316000) 30,000 $
Increase Real Property Transfer Tax to reflect actual receipts and higher than projected revenues
through year end (10114400.317000) 1,250,000 $
Increase Senior Center Rental budget due to increased activity and higher than projected revenues
(10130110.365710) 18,000 $
Decrease Teen Center Rental budget due to lower than projected revenues (10130110.365720) (5,000) $
Increase Meeting Room Rental budget due to increased activity and higher than projected revenues
(10130110.365730) 48,000 $
Increase Auditorium Rental budget due to increased activity and higher than projected revenues
(10130110.365740) 9,000 $
Increase Parks Program Revenues budget due to higher than projected revenues (10130211.365250) 14,500 $
14 2014-15 MID-YEAR REPORT
ATTACHMENT 2
DESCRIPTION AMOUNT
Increase Day Camp Fees budget due to increased activity and higher than projected revenues
(10130212.365210) 36,000 $
Increase City Plunge Admissions budget due to higher than projected revenues (10130220.365510) 20,000 $
Increase Pool Rental & Passes budget due to higher than projected revenues (10130220.365520) 19,000 $
Decrease Aquatics Program budget due to lower than projected revenues (10130220.365530) (6,000) $
Decrease Enrichment Class budget to better reflect actual revenues at year end (10130250.365410) (62,700) $
Increase Teen Center Membership Fee budget due to higher than projected memberships
(10130260.365600) 15,000 $
Increase Special Events budget to reflect actual revenue activity (10130280.365110) 13,000 $
Increase Miscellaneous Revenues in Sr. & Social Services from Sr. Center Association
(10130400.386100) 22,500 $
Increase Police Alarm Permits budget due to higher than projected revenues (10140200.328100) 2,500 $
Decrease Police False Alarm Permits due to lower than projected revenues (10140200.328150) (17,000) $
Increase Vehicle Code Fines budget due to higher than projected revenues (10140200.3382000) 100,000 $
Increase POST Program budget to reflect actual receipts received (10140200.342100) 21,410 $
Increase Live Scan Fees budget due to higher than projected revenues (10140200.368300) 40,000 $
Decrease Admin Citations budget due to lower than projected revenues (10140400.3384000) (1,500) $
Increase Fire Inspection-Business budget due to higher than projected revenues (10145200.367300) 110,000 $
Decrease Hazardous Material Fees budget due to lower than projected revenues (10145200.367500) (20,000) $
Increase Plan Check Fees budget due to increased initial construction activity (10145600.371300) 120,000 $
Increase Film Parking budget due to increased filming activity within the City (10150120.372160) 90,000 $
Increase Farmer's Market budget due to higher than projected revenues (10150120.383160) 15,000 $
Increase Lease-Economic Development Agreements budget due to higher than projected revenues
(10150120.383190) 34,300 $
Increase Plan Check Fees budget due to increased initial construction activity (10150150.371300) 78,920 $
Increase Building Permits budget due to increased construction activity (10150150.321000) 90,000 $
Decrease Electric Permits budget due to lower than projected revenues (10150150.322000) (53,000) $
15 2014-15 MID-YEAR REPORT
ATTACHMENT 2
DESCRIPTION AMOUNT
Increase Residential Building Records budget due to higher than projected revenues
(10150150.323000) 17,500 $
Decrease Plumbing and Heating Permits budget due to lower than projected revenues
(10150150.324000) (135,000) $
Decrease Plan Zone, Subdivision budget due to lower than projected revenues (10150200.364100) (100,000) $
Increase Community Benefit Contribution due to higher than projected revenues (10150200.364500) 65,000 $
Increase Stormwater Plan Check Fees budget due to higher than projected revenues
(10160150.369410) 5,000 $
Increase Traffic Impact Study Fee budget due to higher than projected revenues (10160150.369460) 4,000 $
Increase Plan Check Fees budget due to increased initial construction activity (10160150.371300) 75,000 $
TOTAL GENERAL FUND REVENUE CHANGE 17,258,683 $
16GENERAL FUND
FINANCIAL FORECAST
FY 2014-15 - FY 2023-24
CITY OF CULVER CITY, CALIFORNIA
A current and long-range assessment of
financial conditions and costs for City Services
17
18
CITY OF CULVER CITY
General Fund Financial Forecast
Fiscal Year 2014-15 To 2023-24
PREPARED BY:
FINANCE DEPARTMENT
JEFF S MUIR, CHIEF FINANCIAL OFFICER
MARY V. NOLLER, BUDGET & FINANCIAL OPERATIONS MANAGER
ERICA McADOO, SENIOR BUDGET MANAGEMENT ANALYST
February 23, 2015
19
20
CITY OF CULVER CITY
GENERAL FUND FINANCIAL
FORECAST FY 2014-15 – FY 2023-24
TABLE OF CONTENTS
DESCRIPTION PAGE
GENERAL FUND FORECAST
FORECAST OVERVIEW AND SUMMARY……………………………………………………………………………. 1
FORECAST METHODOLOGIES AND ASSUMPTIONS …………………………………………………………. 3
FORECAST SCHEDULE ………………….………………………………………………………………………………… 5
REVENUES ………….…………………………………………………………………………………………………………. 7
ADDITIONAL EXPENDITURES/POLICY ISSUES…………………………………………………………………33
FINANCIAL RESERVE ………….………………………………………………………………………………………….34
ECONOMIC PERSPECTIVE & OUTLOOK …………………………………………………………………………. 35
21
22
OVERVIEW AND
SUMMARY
23241
OVERVIEW AND SUMMARY
The General Fund Financial Forecast provides a current and long-range financial assessment
addressing revenues, City services and programs, and financial reserve policies. The primary
objective of the Forecast is to provide the City Council and the community with an early financial
assessment and identify significant issues that need to be addressed in the budget development
process. While historically the forecast looked out five years, the scope of this forecast has
been extended out to FY 2023-24 in order to fully capture both known increases in pension
funding contributions as well as the expiration of Measure Y in March of 2023 (if not extended
by the electorate). .
The forecast information presented in this document combines projected resources, current
service expenditures, and mandated expenditures to illustrate the financial impact to the
General Fund and the ending balances for the fund. Recent revenue trends and economic
assumptions (many of which can be found in the Economic Outlook section of this document)
are used to develop these figures. Service expenditures required to sustain the current (FY
2014-15) level of services are used throughout the forecast period based in part on the
projected rate of inflation. The net result of this combined data highlights any adjustments
needed over the forecast period to maintain a balanced budget as required by City policy and
state law. Many of the assumptions, projections, and cost estimates within this document are
based on early and preliminary information that may be refined and changed as the FY 2015-16
Proposed Operating Budget is developed and presented to City Council.
GENERAL FUND
During the forecast period through FY 2022-23, General Fund operating revenue is expected to
change annually at rates ranging between 2.0% to 2.8% growth, with an overall average of 2.4%
annual growth. In FY 2023-24, operating revenues are projected to decrease by 7.9% based on
the sunset of Measure Y. The FY 2014-15 revenue forecast estimate is approximately $17.4
million higher than the current year revised budget, or an overall increase of 18.8%. Some
significant increases in one-time revenue categories that are not projected to be recurring
account for a large portion of this increase. The rate of operating revenue change forecasted in
FY 2014-15 compared to FY 2013-14 Estimated Revenues is actually a 1.9% reduction, after
factoring out certain non-recurring items (in particular, $14.2 million for sale of properties).
Operating revenue growth beyond FY 2014-15 is forecasted at rates of 2.1% in FY 2015-16,
2.0% in FY 2016-17, 2.8% in FY 2017-18, 2.7% in FY 2018-19, 2.8% in FY 2019-20, 2.5% in FY
2020-21, 2.0% in FY 2021-22, 2.1% in FY 2022-23, and then a 7.9% decrease in FY 2023-24 if
Measure Y does sunset.
Projections show that while revenue growth gradually increases over the forecast period, cost
drivers over the same period will cause expenditures to catch up to revenue growth towards the
end of the projection, and the sunset of Measure Y in March 2023 would result in a deficit of
over $11 million in FY 2023-24. The increased growth in expenditures over the forecast period
is primarily due to increased costs for pensions (a certainty), anticipated cost-of-living increases,
and anticipated general inflation in operating and maintenance accounts. The General Fund
252
Forecast Schedule calls out additional revenues assumed as certain development projects are
expected to come online throughout the forecast period. These revenues are further
categorized into one-time and operating. The expenditures section shows the aggregate annual
projected expenditures required to sustain the current FY 2014-15 level of services, with the
assumptions provided later in this document. Displayed separately are transfers for
infrastructure projects and assumed one-time expenditure costs. The additional
expenditures/policy issues section includes amounts to illustrate the impacts of funding
anticipated debt service costs for storm water discharge requirements from the General Fund.
Also listed, for illustration purposes, are additional amounts towards infrastructure projects to
reduce deferred maintenance, and increased pre-funding towards long-term liabilities. These
items will be further considered and evaluated during the FY 2015-16 budget process and are
shown in the schedule only to provide estimated impacts to the General Fund Available Fund
Balance, and aid with the discussion for the potential uses of reserves in excess of the
Contingency Reserve requirement.
In FY 2014-15, the General Fund Adopted Budget assumed a $1.1 million operating surplus but
recommended using $3.2 million for one-time operating and capital costs, resulting in a
projected draw of $2.1 million from reserves. After review of six months of actual revenue and
expenditure trends and other updated information, estimated improvements to operating
revenues and modest expenditure savings result in an estimated $1.7 million operating surplus
for the year. Additionally, as mentioned previously, $14.2 million in one-time revenues for
property sales has been realized and will add to reserves. This should improve the total
financial reserves of the General Fund to approximately $61.6 million, $34.4 million in excess of
the 30% Contingency Reserve requirement. Specific FY 2014-15 assumptions and projections
are further detailed in the separate Fiscal Year 2014-15 Mid-Year Report.
Utilizing economic and other data, General Fund revenues and expenditures have been
forecasted out to FY 2023-34. FY 2019-20 is expected to be the final year of major increases to
pension costs due to phased in changes to actuarial assumptions and practices by CalPERS.
The forecast shows that while revenues are expected to outpace expenditures during the next
several years, by the end of the forecast period cost increases will drive the General Fund into
just about a break-even status, and the sunset of Measure Y would then push the General Fund
into a significant operating deficit. It is also critical to note that the forecast does not assume a
recession during this period.
This forecast argues for continued vigilance in controlling costs, encouraging economic
development and a focus on maintaining service levels. It also argues further discussion and
consideration regarding the scheduled sunset of Measure Y well prior to that time.
263
FORECAST METHODOLOGIES AND ASSUMPTIONS
REVENUES
The Finance Department works with departments responsible for administering the services
and/or collecting the associated revenues to develop revenue projections based on an analysis
of various factors. These include historical trends, current economic conditions, projected
economic activity, and any known future factors. Revenue projections do not include fee or rate
increases and are based on current service levels. More information on assumptions and other
factors is available in the detailed revenue category analysis.
EXPENDITURES
Expenditures assumed in the Forecast are based on the current service level, or funding
needed to provide today’s level of recurring City services. FY 2014-15 expenditure estimates
are based on an analysis of current fiscal year expenditure trends by using six months of actual
expenditures to project estimated expenditure levels at the end of FY 2014-15. The FY 2015-16
base projection modifies current service costs for price changes and assumes the removal of
one-time improvements. Inflation rates are also used to project certain non-personnel services
expenditures derived from Consumer Price Index (CPI) projections for each year from FY 2015-
16 through FY 2023-24 (See Economic Outlook section for more detail on CPI projections
used). Overall, operating expenditures are projected to grow at a faster rate than revenues
during the first five years of the projection primarily due to increasing pension costs.
Cost-of-living adjustments for safety personnel (police and fire) are controlled by the Salary
Initiative Ordinance (SIO), which provides that Culver City safety personnel receive one-half of
salary adjustments provided by the City of Los Angeles and one-half of salary adjustments
provided by the County of Los Angeles. Historically (prior to the recession), SIO increases
averaged about 3% per year. Due to rising pension costs faced by all governments, including
the City of Los Angeles and the County of Los Angeles, the SIO assumption for safety through
this projection is 2% annually. For non-safety employees an assumption of 2% base salary
increase per year is built into this projection. Inflation in the City’s contribution towards wellness
benefits (health, dental, vision and life insurances) is estimated at the full 4% annual cap
included in the bargaining agreements.
Of most significance are increases in the employer contribution rates to CalPERS. Based on
the most recent actuarial report issued by CalPERS, these rates are expected to rise between
FY 2014-15 through FY 2019-20 from 19.1% to 26.1% for non-safety, and from 39.2% to 56.6%
for safety.
Change assumptions for each expenditure category and CalPERS employer rates are listed
below.
274
Category 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24
Non-Safety COLA % 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Safety COLA % 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Non-Safety PERS Employer Rate
Projection from CalPERS 20.63% 22.20% 23.50% 24.70% 26.10% 26.10% 26.10% 26.10% 26.10%
Safety PERS Employer Rate
Projection from CalPERS 42.04% 46.60% 50.00% 53.30% 56.60% 56.70% 56.70% 56.70% 56.70%
Health Insurance Inflation Rate 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%
Workers' Comp 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Retiree Medical Insurance 3.0% 4.0% 4.5% 4.5% 5.0% 5.0% 5.0% 5.0% 5.0%
OPEB Pre-Funding 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Office Supplies & Exp 1.8% 2.2% 2.1% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Travel / Training / Dues 1.8% 2.2% 2.1% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Public Notices / Ads 1.8% 2.2% 2.1% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Repair / Maintenance 1.8% 2.2% 2.1% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Other O&M 1.8% 2.2% 2.1% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Equipment Maintenance Charges 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%
Equipment Amortization Charges 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Legal Services 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Contract Services 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Property Insurance Premiums 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%
Liability Reserve Charges 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Capital 1.8% 2.2% 2.1% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Other 1.8% 2.2% 2.1% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Transfers 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Total Annual Projected % Change
in Operating Expenditures 4.8% 3.5% 3.1% 3.1% 3.2% 2.2% 2.2% 2.2% 2.2%
28
GENERAL FUND
FORECAST
29
305
GENERAL FUND FORECAST
2013-14
Actual
2014-15
Estimate
2015-16
Projection
2016-17
Projection
2017-18
Projection
2018-19
Projection
2019-20
Projection
2020-21
Projection
2021-22
Projection
2022-23
Projection
2023-24
Projection
RESOURCES
Beginning Balance (Excluding Contingency Reserve) 39,749 18,535 34,376 34,769 35,164 31,756 27,823 22,923 16,996 10,938 4,725
CURRENT REVENUES
Operating Revenue 89,043 87,184 89,027 90,614 93,019 95,455 97,975 100,327 102,244 104,217 106,252
Measure Y 8,190 8,440 8,651 9,000 9,367 9,695 10,077 10,396 10,707 11,159 0
Additional Operating Rev from Development 0 0 342 420 611 738 490 0 0 0 0
One-Time Revenue - Development 0 0 997 1,975 1,600 1,400 1,020 0 0 0 0
One-Time Revenue - Sale of Properties 014,2000 00 00 00 00
TOTAL CURRENT REVENUES 97,232 109,824 99,017 102,009 104,597 107,288 109,562 110,723 112,951 115,376 106,252
EXPENDITURES
Current Service 90,388 90,629 95,010 98,288 101,351 104,497 107,800 110,205 112,651 115,162 117,739
Infrastructure / Facilities Projects 943 2,057 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
One-time Costs - Elections & Other 0 1,224 250 325 250 325 250 325 250 325 250
1% Assumed Savings - Vacancies, O&M, etc. 0 0 (950) (983) (1,014) (1,045) (1,078) (1,102) (1,127) (1,152) (1,177)
TOTAL EXPENDITURES 91,331 93,910 95,310 98,630 101,587 104,777 107,972 110,428 112,775 115,336 117,812
ANNUAL SURPLUS / (DEFICIT) 5,902 15,914 3,707 3,379 3,010 2,511 1,591 295 177 40 (11,560)
ADDITIONAL EXPENDITURES/POLICY ISSUES
Storm Water Discharge Requirements 3,500 3,500 3,500 3,500 3,500 3,500 3,500
Increased Infrastructure Funding 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
Increased Pre-Funding of Long-Term Liabilities 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
Additional Expenditures 0 0 2,000 2,000 5,500 5,500 5,500 5,500 5,500 5,500 5,500
CONTINGENCY RESERVE REQUIREMENT 27,116 27,189 28,503 29,486 30,405 31,349 32,340 33,061 33,795 34,549 35,322
ENDING BALANCE EXCLUDING CONTINGENCY 18,535 34,376 34,769 35,164 31,756 27,823 22,923 16,996 10,938 4,725 (13,108)
ENDING TOTAL BALANCE 45,651 61,565 63,272 64,651 62,161 59,172 55,263 50,057 44,734 39,274 22,214
General Fund Forecast [in thousands]
316
GENERAL FUND FORECAST SCHEDULE EXPLANATION
BEGINNING BALANCE
“Beginning Balance” reflects the amount of funds available for use at the beginning of the fiscal
year. The balance is the result of the net prior year-end revenues-to-expenditures, except in
years projected to have a negative ending balance. The Beginning Balance does not include
the City’s Contingency Reserve requirement.
CURRENT REVENUES
“Current Revenues” highlights the Operating Revenue – including taxes and all other
sources, including fines and fees and other charges for current service. Also included are
projected additional operating revenues to be added in future years as a result of specific
developments. Projections for one-time revenues also associated with development or other
occurrences are also included.
EXPENDITURES
“Current Service” shows the aggregate annual projected expenditures required to sustain the
current FY 2014-15 level of services throughout the forecast period. Separately listed are the
projected minimum annual contributions towards needed infrastructure and facilities capital
improvement projects. Additionally, an anticipated amount for miscellaneous one-time
expenditure needs is factored in. Lastly, an assumption of 1% of annual expenditure savings
against the projected budget amount due to position vacancies, unexpended Operations and
Maintenance funding, etc., is included.
ADDITIONAL EXPENDITURE/POLICY ISSUES
These are the incremental cost of various items outside of the standard operating budget that
are to be considered during policy discussions.
CONTINGENCY RESERVE REQUIREMENT
Represents the required General Fund Contingency Reserve amount based on thirty percent of
Current Service and Infrastructure/Facilities Projects expenditures.
ENDING AVAILABLE BALANCE
Represents fund balance in excess of the Contingency Reserve Requirement. This amount can
be appropriated towards one-time purposes by the City Council, pursuant to City financial
policies.
327
GENERAL FUND REVENUES
Looking Back
Over the past ten years, General Fund Revenues have grown at an average rate of 3.5%, after
factoring out land sale proceeds. However, during this period there was great volatility, with
the housing bubble fueling revenue gains that were unrealistic in the long-term. The Great
Recession saw revenues reduced and then flat for several years. Fiscal Year 2012-13 saw
total General Fund revenues recover to the pre-recession high from Fiscal Year 2007-08. This
growth persisted, with Fiscal Year 2013-14 receipts reaching record high levels in recent
history, flattening out into Fiscal Year 2014-15. The graphs below represent the ten year
history of total General Fund revenues, as well as the year-to-year changes.
$0
$20
$40
$60
$80
$100
$120
Thousands
General Fund Revenues
(Excluding Land Sale Proceeds)
9.5%
7.4%
7.5%
-7.3%
0.7%
1.1%
-2.1%
8.2%
12.6%
-2.0%
General Revenues
(Year-to-Year Percentage Change)
338
Looking Forward
The FY 2014-15 revenue forecast estimate is approximately $17.4 million higher than the
current year revised budget, or an overall increase of 18.8%. Some significant increases in
certain revenue categories that are not projected to be recurring account for a large portion of
this increase. Over the forecast period, excluding the final year, operating revenues are
expected to increase at an average annual rate of 2.4%, with a significant decrease in FY
2023-24 caused solely by the sunset of Measure Y.
General Fund Forecast of Current Revenues
(in thousands)
The table below represents a consolidated view of the assumed rates of change in each revenue
category over the course of the forecast. This data is repeated in each individual revenue category
section.
2014-15
Estimate
2015-16
Proj.
2016-17
Proj.
2017-18
Proj.
2018-19
Proj.
2019-20
Proj.
2020-21
Proj.
2021-22
Proj.
2022-23
Proj.
2023-24
Proj.
Property Tax 4,428 4,871 5,358 5,519 5,685 5,856 6,032 6,213 6,399 6,591
Sales Tax 19,631 21,555 21,176 22,041 22,812 23,711 24,460 25,194 25,950 26,729
Measure Y 8,440 8,651 9,000 9,367 9,695 10,077 10,396 10,707 11,159 0
PSAF Tax 359 394 383 396 410 422 435 448 461 475
Business License Tax 11,200 11,452 11,765 12,206 12,651 13,015 13,348 13,648 13,955 14,269
Franchise Tax 1,400 1,421 1,442 1,464 1,486 1,508 1,531 1,554 1,577 1,601
Real Prop. Transfer Tax 2,750 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500
UT. User Tax (Elect.) 6,433 6,626 6,884 7,117 7,329 7,538 7,723 7,877 8,035 8,196
UT. User Tax (Gas) 1,035 1,066 1,107 1,144 1,178 1,212 1,242 1,267 1,292 1,318
UT. User Tax (Water) 1,400 1,428 1,469 1,519 1,564 1,609 1,648 1,681 1,715 1,749
UT. User Tax (TEL) 5,040 5,484 5,720 5,720 5,554 5,387 5,225 5,068 4,916 4,769
UT. User Tax (Cable TV) 882 900 891 873 847 822 806 790 774 759
Transient Occupancy Tax 5,600 5,768 5,941 6,119 6,598 7,105 7,622 7,774 7,929 8,088
Comm/Ind. Dev. Tax 600 400 400 400 400 400 400 400 400 400
Licenses and Permits 3,077 3,139 3,202 3,266 3,331 3,398 3,466 3,535 3,606 3,678
Intergovernmental 3,9934,0534,1144,1764,2394,3034,3684,4344,5014,569
Charges For Service 7,752 7,907 8,065 8,226 8,391 8,559 8,730 8,905 9,083 9,265
Fines and Forfeitures 3,850 3,927 4,006 4,086 4,168 4,251 4,336 4,423 4,511 4,601
Use Of Money And Property 1,461 804 820 836 861 887 922 959 997 1,037
Interfund Revenues 3,896 3,935 3,974 4,014 4,054 4,095 4,136 4,177 4,219 4,261
Other Revenues 335 335 335 335 335 335 335 335 335 335
Transfers In 2,062 2,062 2,062 2,062 2,062 2,062 2,062 2,062 2,062 2,062
Operating Revenue Sub-total 95,624 97,678 99,614 102,386 105,150 108,052 110,723 112,951 115,376 106,252
Recurring New Development Revenues
Sales Tax 209 120 208 37
Business Tax 54 172 167 78 39
Transient Occupancy Tax 350 368 368
UUT 79 128 94 84 46
Additional Operating Revenue - 342 420 611 738 490 - - - -
One-Time Revenues
One-Time Development Permit Fees 997 1,975 1,600 1,400 1,020
Property Sale Proceeds 14,200
TOTAL GF REVENUES 109,824 99,017 102,009 104,597 107,288 109,562 110,723 112,951 115,376 106,252
349
REVENUES 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24
Property Tax 10.00% 10.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Sales Tax 9.80% -2.70% 3.50% 3.50% 3.00% 3.00% 3.00% 3.00% 3.00%
Measure Y 2.50% 4.03% 4.08% 3.50% 3.94% 3.16% 3.00% 4.21% -100.00%
PSAF TAX 9.80% -2.70% 3.50% 3.50% 3.00% 3.00% 3.00% 3.00% 3.00%
Business License Tax 2.25% 2.25% 2.25% 2.25% 2.25% 2.25% 2.25% 2.25% 2.25%
Franchise Tax 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50%
Real Property Transfer Tax -45.45% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Utility Users Tax - Electricity 3.00% 3.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Utility Users Tax - Gas 3.00% 3.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Utility Users Tax - Water 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Utility Users Tax - Telecomm 8.80% 4.30% 0.00% -2.90% -3.00% -3.00% -3.00% -3.00% -3.00%
Utility Users Tax - Cable TV 2.00% -1.00% -2.00% -3.00% -3.00% -2.00% -2.00% -2.00% -2.00%
Transient Occupancy Tax 3.00% 3.00% 3.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Commercial/Industrial Dev Tax -33.30% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Licenses and Permits 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Intergovernmental 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50%
Charges for Services 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Fines and Forfeitures 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Use of Money and Property -45.00% 2.00% 2.00% 3.00% 3.00% 4.00% 4.00% 4.00% 4.00%
Interfund Revenues 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Other Revenues 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Transfers-In 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Total Annual Projected % Change in
Operating Revenue 2.1% 2.0% 2.8% 2.7% 2.8% 2.5% 2.0% 2.1% -7.9%
Change Rate Assumptions
3510
PROPERTY TAX
The valuation of property in the City is determined by the Los Angeles County Tax Assessor,
except for public utility property which is assessed by the State Board of Equalization. The County
levies a base tax of one percent of assessed valuation (subject to annual growth limitations of two
percent). In 1993, the state passed legislation that resulted in the transfer of property tax
revenues to schools from cities and counties. This transfer resulted in the City's share of property
tax revenues being reduced to about 10.5 percent of the one percent County levy. The graph
below represents the breakdown of a property tax dollar in a non-redevelopment project area (Tax
District #1 refers to the City):
Also included in the Property Tax revenue category is the City’s share of pass-through payments
of incremental property taxes generated by the former Redevelopment Agency (now Successor
Agency). The on-going portion of this revenue is expected to decrease based on a recent
decision in a lawsuit between the Los Angeles Unified School District and Los Angeles County.
Additionally, as part of the redevelopment dissolution process, any property tax revenues
allocated to the Successor Agency in excess of required obligation payments over a six month
period are distributed to the various taxing entities. When this occurs, the City will receive its
10.5% share of such distributions. Large distributions occurred in Fiscal Years 2012-13 and 2013-
14, but this is considered one-time revenue as it cannot be counted on to recur.
3611
Property Tax revenues are remitted by the County based on actual payments. There can be
minor fluctuation year-to-year based on late payments. Therefore, reviewing the City’s assessed
valuation is a better predictor than actual Property Tax receipts from year-to-year.
A significant recovery in the housing market returned assessed valuation growth in FY 2014-15 to
over 7%. It is expected that this level of growth begin to taper off in FY 2017-18 and trend back
down towards the 3% inflationary assumption over the span of the forecast. However, it is also
anticipated that annual property tax transfers from the Successor Agency to the Culver City
Redevelopment Agency will increase in FY 2015-16 and FY 2016-17, and carry forward.
Projected Annual Rates of Change
FY15-16 FY16-17 FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 FY22-23 FY23-24
10.00% 10.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
|10 10|500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Assessed Valuation
($ Millions)
7.0%
8.1%
6.7%
6.4%
2.1%
-0.2%
2.1%
1.7%
5.5%
7.3%
Assessed Valuation
(Year-to-Year Percentage Change)
3712
SALES TAX
Bradley-Burns Sales Tax
In accordance with the California Revenue and Taxation Code, the Bradley-Burns Uniform Local
Sales and Use Tax Law, the State of California imposes a 7.5 percent sales and use tax on all
taxable sales in the City. The City receives 1.0 percent of the transactions subject to the sales and
use tax. An additional 0.5 percent is authorized by "Proposition A", another 0.5 percent by
"Proposition C," and another 0.5 percent by “Measure R”, all of which are levied within Los
Angeles County for various transportation purposes. The breakdown is represented by the
following graph:
$0
$5,000
$10,000
$15,000
$20,000
$25,000
Thousands
Sales Tax Revenues
(Total $)
3813
Sales Tax is the City's largest revenue source representing approximately 17.9 percent of
estimated Fiscal Year 2014-15 General Fund revenue. This revenue source can be volatile based
on economic conditions. This is evidenced by the dramatic drops during the recession.
Significant recovery has occurred, and modest growth is projected during the balance of the
projection, based on input from the City’s sales tax consultant. A significant one-time increase in
FY 2015-16 is expected as a result of the State unwinding the Sales Tax Triple-Flip. An overall
decrease in FY 2016-17 is then projected to normalize this occurrence.
Public Safety Sales Tax (PSAF)
The City also receives one-half percent levy of the Public Safety Sales Tax, approved by the
voters in November 1993. For FY 2014-15, revenues are estimated to be $359,000. Changes in
this revenue source are forecasted at the same level as sales tax.
Projected Annual Rates of Change
FY15-16 FY16-17 FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 FY22-23 FY23-24
9.80% -2.70% 3.50% 3.50% 3.00% 3.00% 3.00% 3.00% 3.00%
3.9%
5.4%
-1.5%
-10.7% -10.6%
13.1%
4.8%
6.6%
4.0%
4.3%
Sales Tax Revenues
(Year-to-Year Percentage Change)
3914
MEASURE Y
In November 2012, Culver City residents overwhelming voted for a 10-year ½ cent Transactions
and Use Tax. Measure Y took effect on April 1, 2013. With the exception of certain goods sold to
operators of common carrier aircraft, the transactions and use tax is imposed on the same goods
and merchandise as the local sales and use tax. However, where the Bradley-Burns Sales and
Use Tax is generally allocated to the jurisdiction where the sale is negotiated or the order is taken,
the transactions and use tax is allocated to the district where the goods are delivered or placed
into use. This results in the receipts from Measure Y being slightly less than half of the Bradley-
Burns receipts. Measure Y receipts are forecasted as a factor of the Bradley-Burns amount. The
estimated factor used for the duration of the forecast was developed in conjunction with the City’s
sales tax consultant.
Projected Percentage of Bradley-Burns
FY15-16 FY16-17 FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 FY22-23 FY23-24
42.50% 42.50% 42.50% 42.50% 42.50% 42.50% 42.50% 42.50% 42.50%
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
Thousands
Sales Tax -Measure Y Revenues
(Total $)
4015
BUSINESS LICENSE TAX
Culver City Municipal Code requires a tax certificate as a prerequisite for conducting businesses,
trades or professions in the City. The Code further imposes an annual tax for the privilege of
conducting such businesses at different rates, depending on the type of business. Generally, this
revenue is projected to change at a level similar to Sales Tax.
Projected Annual Rates of Change
FY15-16 FY16-17 FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 FY22-23 FY23-24
2.25% 2.25% 2.25% 2.25% 2.25% 2.25% 2.25% 2.25% 2.25%
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
Thousands
Business Tax Revenues
(Total $)
4.4%
7.4%
10.8%
3.6%
-8.4%
4.1%
-1.2%
3.3%
9.4%
-0.1%
Business Tax Revenues
(Year-to-Year Percentage Change)
4116
FRANCHISE TAX
The City imposes fees on gas, electric, cable television and oil pipeline companies for the privilege
of using City streets. Although there is year-to-year variation, this revenue has consistently
remained between $1.2 million and $1.4 million for the last nine years.
Projected Annual Rates of Change
FY15-16 FY16-17 FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 FY22-23 FY23-24
1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50%
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
Thousands
Franchise Tax Revenues
(Total $)
6.3%
8.2%
4.5%
8.8%
-12.3%
5.5%
-5.7%
10.1%
3.6%
-3.4%
Franchise Tax Revenues
(Year-to-Year Percentage Change)
4217
REAL PROPERTY TRANSFER TAX
The Culver City Municipal Code authorizes the imposition of a transfer tax on real property sold in
the city. The rate is $2.25 per $500 of purchase value. This source of revenue can fluctuate
dramatically based on the real estate market. Because of this a flat amount of $1.5 million per
year is the base assumption.
Projected Annual Rates of Change
FY15-16 FY16-17 FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 FY22-23 FY23-24
-45.45% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
Thousands
Real Property Tax Revenues
(Total $)
16.4%
11.8%
2.5%
-69.1%
6.7%
53.9%
12.4%
37.5%
-21.9%
47.7%
Real Property Tax Revenues
(Year-to-Year Percentage Change)
4318
UTILITY USERS TAX (UUT)
As authorized by the Culver City Municipal Code, an 11.0 percent utility tax is levied on electricity,
water, gas, cable TV, and both wired and cellular/mobile telephone service. Utility taxes are
collectively the second largest revenue source for the General Fund. Seasonal and annual
weather fluctuations can impact utility consumption. Generally, the combination of consumption
and cost are expected to increase in the coming years for electricity, natural gas and water,
resulting in modest annual increases in UUT revenues. However, dramatic technology and
consumption changes in the telephone and cable television industries are expected to result in
consistent reductions in revenue in future years.
$4,000
$4,500
$5,000
$5,500
$6,000
$6,500
Thousands
UUT-Electricity Tax Revenues
(Total $)
10.6%
12.1%
-2.7%
-0.8%
-2.3%
4.4%
-3.4%
2.6%
4.9%
2.7%
UUT-Electricty Tax Revenues
(Year-to-Year Percentage Change)
4419
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
Thousands
UUT-Water Tax Revenues
(Total $)
0.3%
15.8%
3.6%
7.0%
1.6%
14.9%
1.9%
0.9%
38.0%
-19.0%
UUT -Water Tax Revenues
(Year-to-Year Percentage Change)
4520
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
Thousands
UUT-Gas Tax Revenues
(Total $)
6.3%
-0.9%
9.7%
-19.2%
-8.2%
3.4%
-10.3%
3.0%
6.4%
-0.6%
UUT -Gas Tax Revenues
(Year-to-Year Percentage Change)
4621
$4,400
$4,600
$4,800
$5,000
$5,200
$5,400
$5,600
$5,800
Thousands
UUT- Telecom Tax Revenues
(Total $)
-1.4%
-2.2%
4.6%
7.8%
1.1%
-3.2%
3.3%
-3.7%
-7.3%
0.8%
UUT - Telecom Revenues
(Year-to-Year Percentage Change)
4722
Projected Annual Rates of Change
FY15-16 FY16-17 FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 FY22-23 FY23-24
Electricity 3.00% 3.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Gas 3.00% 3.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Water 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Telecom 8.80% 4.30% 0.00% -2.90% -3.00% -3.00% -3.00% -3.00% -3.00%
Cable 2.00% -1.00% -2.00% -3.00% -3.00% -2.00% -2.00% -2.00% -2.00%
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
Thousands
UUT-Cable Tax Revenues
(Total $)
3.3%
9.2%
21.4%
-8.1%
-5.7%
12.2%
-1.4%
23.0%
-12.3%
9.9%
UUT -Cable Revenues
(Year-to-Year Percentage Change)
4823
TRANSIENT OCCUPANCY TAX (TOT)
The Culver City Municipal Code authorizes the City to levy a tax for the privilege of occupying
lodgings on a transient basis. In April 2012, Culver City residents approved a ballot measure that
increased the rate from 12.0 percent to 14.0 percent (a 16.67% rate increase), to be consistent
with surrounding cities. This revenue source spiked in fiscal year 2012-13 with a 37% increase
over the prior year, well beyond the 16.67% increase in the tax rate. With occupancy and nightly
room rates both rising, TOT revenues reached record levels for fiscal year 2013-14, improving an
additional 8%.
Projected Annual Rates of Change
FY15-16 FY16-17 FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 FY22-23 FY23-24
3.00% 3.00% 3.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
Thousands
Transient Occupancy Tax (TOT) Revenues
(Total $)
16.0%
39.5%
-12.5%
4.4%
0.8%
10.7%
15.1%
37.4%
7.9%
-0.1%
Transient Occupancy Tax (TOT) Revenues
(Year-to-Year Percentage Change)
4924
COMMERCIAL/INDUSTRIAL DEVELOPMENT TAX
In 1990, Culver City imposed a general tax on all commercial/industrial development in the City.
The rate is $25 for the first $250,000 in building permit valuation and 1.5 percent of valuation
thereafter. This is a tax that varies wildly from year-to-year depending on the level and type of new
development activity that occurs in a given year, as evidenced by the graph below. The baseline
estimate for this tax will be set at a flat $400,000 for the duration of the projection.
Projected Annual Rates of Change
FY15-16 FY16-17 FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 FY22-23 FY23-24
-33.30% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
$0
$500
$1,000
$1,500
$2,000
$2,500
Thousands
Commercial/Industrial Tax Revenues
(Total $)
578.8%
-63.4%
287.8%
-77.3%
-61.0%
-47.7%
104.1%
98.1%
118.4%
-32.2%
Commercial/Industrial Revenues
(Year-to-Year Percentage Change)
5025
LICENSES AND PERMITS
The California Government Code and the State Constitution give cities the authority to assess
certain license and permit fees as a means of recovering the cost of regulating various activities.
Examples include building, electrical and plumbing permits, filming permits, taxi permits and police
alarm permits.
Projected Annual Rates of Change
FY15-16 FY16-17 FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 FY22-23 FY23-24
2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
Thousands
License & Permits Tax Revenues
(Total $)
57.6%
-9.1%
56.7%
-22.7%
7.0%
-8.0%
23.9%
4.9%
39.5%
-15.3%
License & Permits Revenues
(Year-to-Year Percentage Change)
5126
INTERGOVERNMENTAL
The primary revenue included in this category (approximately 98% of the total) is the state
allocated motor vehicle in-lieu tax. Section 11005 of the State Revenue and Taxation Code
imposes an annual license fee that was equivalent to 2.0 percent of the market value of motor
vehicles before recent rate decreases enacted by the state. The code also specifies that 81.25
percent of the revenues are to be divided equally between cities and counties and apportioned on
the basis of population. This revenue performs relatively consistently year-to-year.
Projected Annual Rates of Change
FY15-16 FY16-17 FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 FY22-23 FY23-24
1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50%
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
Thousands
Intergovernmental Revenues
(Total $)
-12.5%
3.6% 3.7%
4.9%
6.0%
-0.5%
-1.5%
1.0%
11.4%
2.6%
Intergovernmental Revenues
(Year-to-Year Percentage Change)
5227
CHARGES FOR SERVICES
Service charges or fees are imposed on the user for a specialized service provided by the City
under the rationale that benefiting parties should pay for the cost of that service rather than the
general public. Examples of such services include various recreation program and facility rental
fees, plan check fees and hazardous material fees. Increased development activity and demand
for recreational facilities and programs has this revenue category trending upwards.
Projected Annual Rates of Change
FY15-16 FY16-17 FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 FY22-23 FY23-24
2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
Thousands
Charges for Services -Revenues
(Total $)
24.6%
11.2%
11.8%
-2.1%
-6.3%
-1.0%
11.3%
7.2%
11.2%
-4.1%
Charges for Services -Revenues
(Year-to-Year Percentage Change)
5328
FINES AND FORFEITURES
The California Vehicle and Penal Codes impose fines and penalties for traffic violations and
vehicular parking. The Culver City Municipal Code also imposes certain fines for parking
violations. Moving violations (including the Photo Enforcement Program) are collected by the
County of Los Angeles Superior Court and a portion distributed to the City, less a retainer for costs
of administration. The City is responsible for parking fine collection. Significant street projects
closed a number of Photo Enforcement intersections in prior years, but these systems are back
online and revenues are trending back to their previous levels.
Projected Annual Rates of Change
FY15-16 FY16-17 FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 FY22-23 FY23-24
2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
Thousands
Fines & Forfeitures Revenues
(Total $)
4.4%
7.1%
1.6%
-17.3%
13.5%
5.4%
-32.8%
15.6%
17.5%
-7.5%
Fines & Forfeitures Revenues
(Year-to-Year Percentage Change)
5429
USE OF MONEY AND PROPERTY
This category of revenue includes interest earnings and lease income. The City pools its available
cash from various funds and invests in differing instruments allowed under the City's Investment
Policy approved by the City Council. These earnings have suffered dramatically based on record
low interest rates for several years. Earnings are allocated to various funds on the basis of
proportionate balances. In FY 2012-13, lease income from the Pacific Theaters was added to this
category, but removed in FY 2015-16 due to the sale of the property.
s
Projected Annual Rates of Change
FY15-16 FY16-17 FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 FY22-23 FY23-24
-45.00% 2.00% 2.00% 3.00% 3.00% 4.00% 4.00% 4.00% 4.00%
$0
$500
$1,000
$1,500
$2,000
$2,500
Thousands
Use of Money/Prop
(Total $)
2.5%
112.5%
14.6%
-24.0%
-11.5%
-39.3%
-42.2%
190.5%
9.1%
-6.1%
Use of Money/Prop
(Year-to-Year Percentage Change)
5530
INTERFUND TRANSFERS
Revenues in this area are generally from repayments for city-wide overhead service costs. Culver
City utilizes this category to monitor funds received from interagency billings and recovering the
cost of providing general administrative and indirect services to other funds. This category
included transfers from the former Redevelopment Agency for services provided by the General
Fund. FY 2012-13 represents the first full year without such reimbursements.
Projected Annual Rates of Change
FY15-16 FY16-17 FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 FY22-23 FY23-24
1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
Thousands
Interfund Transfers -Revenues
(Total $)
8.6%
1.1%
13.3%
3.5%
8.0%
-5.8%
-26.6%
-38.5%
-15.5%
0.5%
Interfund Transfers -Revenues
(Year-to-Year Percentage Change)
5631
TRANSFERS IN
Transfers-In are revenues from the movement of resources between funds to pay for specific
activities. For any one transaction, the transfer-in and the transfer-out is classified in the same
way, so that the total transfers-in for the entire municipality equal the total transfers-out.
Projected Annual Rates of Change
FY15-16 FY16-17 FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 FY22-23 FY23-24
0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
Thousands
Transfers In -Revenues
(Total $)
444.3%
-77.7%
-2.4%
7.9%
149.7%
-34.6% -36.3%
39.9%
12.2%
-23.6%
Transfers In -Revenues
(Year-to-Year Percentage Change)
5732
OTHER REVENUES
Other Revenues are generally proceeds that are one-time amounts not classified in any of the
above-discussed revenue classifications. The significant spikes in Fiscal Years 2010-11 and
2014-15 (estimated) involve the sale of a City property.
Projected Annual Rates of Change
FY15-16 FY16-17 FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 FY22-23 FY23-24
0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
Thousands
Other Revenues
(Total $)
1572.8%
-94.1%
187.1%
528.6%
-79.3%
2226.5%
-89.9%
-36.8%
-38.1%
2371.2%
Other Revenues
(Year-to-Year Percentage Change)
5833
ADDITIONAL EXPENDITURES / POLICY ISSUES
In addition to funding current service levels, the City Council will also need to consider allocating
funding for additional items in the coming years.
Storm Water Discharge Requirements
Culver City, along with other public agencies, is subject to meeting requirements under the
National Pollutant Discharge Elimination System (NPDES) permit program. The new Municipally
Separate Storm Sewer (MS4) Permit imposes severe restrictions on Total Maximum Daily Loads
(TMDLs) for certain pollutants, eight of which affect Culver City. Compliance with these TMDLs
will be very difficult to meet, and extremely costly. It is currently estimated that the City may be
responsible for as much as $50 million in needed infrastructure investments to comply. The
forecast includes a debt service estimate for financing these improvements through a bond issue,
if the General Fund were responsible for servicing the debt. It also includes several hundred
thousand dollars annually for operating and maintenance costs. Staff will be working to identify
alternative financing methods so that the General Fund is not responsible for the costs. Absent
such an alternative, the debt service amount was included to show the effect on fund balance
over the forecast period.
Additional Infrastructure Funding
A significant backlog of infrastructure and facility improvements (deferred maintenance) due to
lack of funding exists, and has been documented in prior budgets and forecasts. With fund
balance available in excess of the required Contingency Reserve, the City Council may explore
increased annual funding towards such projects. Identifying a future revenue stream, or
dedicating more General Fund resources, will ultimately be required.
Additional Pre-funding of Long-Term Liabilities
With significant long-term liabilities for pension and retiree medical costs, the City Council may
explore utilizing fund balance in excess of the required Contingency Reserve towards increased
pre-funding of these benefits, to save future interest costs. It is estimated by the City’s actuary
that each additional $1 million contributed towards pension liabilities now equals $5 million in
taxpayer savings over twenty-five years. Similar, although slightly less, savings could be
achieved by additional pre-funding into the retiree medical trust fund.
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FINANCIAL RESERVES
The establishment and maintenance of appropriate reserves within the General Fund is critical
to prudent financial management. The Government Finance Officers Association (GFOA)
recommends that local governments, regardless of size, maintain a General Fund financial
reserve amount of no less than one (8%) to two months (17%) of operating expenditures. The
City’s policy is to maintain a Contingency Reserve of thirty percent (30%). GFOA also lists
increased levels of reserves as a factor credit rating agencies use to determine a municipality’s
creditworthiness.
The Contingency Reserve will only be utilized to meet one or more of the following events:
? A catastrophic loss of critical infrastructure requiring an expenditure of greater than or
equal to five percent (5%) of the General Fund, Operating Budget, as defined above.
? A State or Federally declared state of emergency where the City response or related
City loss is greater than or equal to five percent (5%) of the General Fund, Operating
Budget.
? Any settlement arising from a claim or judgment where the loss exceeds the City’s
insured policy coverage by an amount greater than or equal to five percent (5%) of the
General Fund, Operating Budget.
? Deviation from budgeted revenue projections in the top three General Fund revenue
categories, namely, Sales Taxes, Utility Users’ Taxes and Business Taxes in a
cumulative amount greater than or equal to five percent (5%) of the General Fund,
Operating Budget.
? Any action by another government that eliminates or shifts revenues from the City
amounting to greater than or equal to five percent (5%) of the General Fund, Operating
Budget.
? Inability of the City to meet its debt service obligations in any given year.
? Any combination of factors 1) a.-f. amounting to greater than or equal to five percent
(5%) of the General Fund, Operating Budget in any one fiscal year.
Use of the Contingency Reserve must be approved by the City Council. Should the
Contingency Reserve commitment be used, the City Manager shall present a plan to City
Council to replenish the reserve within five years. Reserves beyond this level may be used for
one-time expenditure purposes or to pay down long-term liabilities, in accordance with the City’s
financial policies.
60
ECONOMIC
OUTLOOK &
PERSPECTIVE
61
6235
ECONOMIC OUTLOOK
OVERVIEW
A forecast of the City’s finances recognizes that the City’s fiscal health is directly linked to the
success of the local, national, and global economies. In light of this relationship, the
fiscal projections provided in this document are based, in large part, upon an analysis of
historical and current economic trends. The historical data and forecast projections are
provided by government and private organizations. This section provides projections for
the local and national economies, which support the fiscal projections presented in this
document.
INFLATION
The Consumer Price Index (CPI), commonly referred to as the inflation rate, measures the
average price change for a market basket of consumer goods and services. This basket of
goods contains a wide array of items, ranging from food and gasoline to college tuition and
medical supplies. The CPI does not, however, include investments such as stocks or real
estate.
The Bureau of Labor Statistics has classified each expenditure item in this basket of goods into
more than 200 categories. Each one of these categories is cataloged into eight major groups, as
shown in the adjacent figure. For example, gasoline is listed under the transportation category
and makes up 5.2% of the basket of goods.
The Consumer Price Index is used as the inflationary factor for specific non-personnel services
expenditures to develop the General Fund and other fund’s budget forecast. This allows the City
to plan for possible increases in certain commodities and other costs in the coming years by
taking into account rising prices.
Additionally, CPI also serves as a cost of living index. After reviewing data from the
State Department of Finance, the Los Angeles Economic Development
Corporation, and the UCLA Andersen Forecast, the projections for CPI have been
developed and modified to reflect the City’s budget cycle based on a fiscal year from July 1 to
June 30.
Transportation,
18%
Housing, 46%
Education &
Communication,
7%
Food & Beverage,
16%
Medical Care, 6%
Apparel, 4%
Other, 3%
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Source: Department of Labor
REGIONAL ECONOMIC CONDITIONS
The following information is an excerpt from the Los Angeles County Economic Development
Corporation’s 2015 Economic Forecast & Industry Outlook, prepared by the The Kyser Center
for Economic Research.
Los Angeles County covers 4,084 square miles and includes 88 cities, the largest of which is
the City of Los Angeles. The population in 2013 was over 10.0 million, making it the most
populous county in California. The economy of Los Angeles County is enormous and
complex. If it were a nation, it would be the twenty-first largest economy in the world. In
addition to its well-known entertainment and tourism industries, Los Angeles is also an
important hub of manufacturing, international trade and innovation.
After peaking at 12.6% in 2010, the unemployment rate in Los Angeles County was down to
8.1% in July 2014, falling well below the year ago rate of 10.0%. The LAEDC forecasts the
unemployment rate in Los Angeles County will average 8.2% in 2014, declining to 7.7% in
2015.
The number of nonfarm jobs in Los Angeles County should reach nearly 4.2 million in 2014,
an increase of 1.9% compared with 2013. In 2015, employment will expand by 1.5% to 4.25
million nonfarm jobs, finally surpassing the prerecession peak reached in 2007. Growth this
year has been broad-based with nearly every private sector industry, creating jobs across a
wide range of skill and income levels. The fastest growing sectors were construction (8.5%);
professional, scientific and technical services (4.8%); and administrative, support and waste
services (4.8%). The sectors that added the largest number of jobs were health care (14,700
jobs) and professional, scientific and technical services (13,200).
Manufacturing is the only sector that is expected to post a decline in employment this year–
5.4%
-2.2%
0.9%
2.9%
1.6%
1.4%
1.8%
1.8%
2.2%
2.1%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
LA-Orange County-Riverside CPI % Change
(Actual Through FY13-14/Forcasted Through FY23-24)
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2.0% or a loss of 7,300 jobs. The news is not all bad, however. A handful of manufacturing
sectors posted small increases in employment over the first half of the year: machinery,
electrical equipment and appliances, furniture, and miscellaneous durable goods, a category
that includes medical instruments.
Along with a stronger employment outlook, total personal income and per capita income are
expected to post stronger gains this year and next. Consumer spending as measured by total
taxable sales is also on the rise. This means local governments will see an increase in sales
and use tax revenues.
Population growth is expected to slow this year and next. Most of the recent population
growth in Los Angeles County has been the result of natural increase (births outnumbering
deaths). Net migration in 2013 was nearly flat. A lack of affordable housing units for low and
middle-income households is one factor holding population growth in check.
Although still not fully recovered, the housing market in Los Angeles has improved – median
prices have risen on a year-over-year basis since the third quarter of 2012 and new home
construction has picked up, most notably in the multi-family and rental sector. As with the rest
of Southern California, the return to “normal” for the region’s housing market will take a
number of years.
Entertainment and Trade
The entertainment industry is a cornerstone of the Los Angeles economy. At its core is motion
picture and video production. The ripple effects of activity in the entertainment sector are wide
ranging. When a movie is filmed, actors, costume designers and special effects creators are
employed, but so are persons working in industries as dissimilar as catering, security and
transportation. The entertainment industry also has strong linkages to other local industries.
Examples include licensing agreements with local toy companies and video game developers;
the showcasing of L.A.’s fashion designers at Hollywood red carpet events; and collaboration
with the region’s technology innovators – most famously JPL, the originator of computer
generated imagery (CGI).
During the first seven months of 2014, employment in the motion picture and sound recording
industry (the largest component of the entertainment sector) averaged 128,000 workers,
which was up by 7.2% (nearly 8,600 jobs) over the same period last year, bucking the national
trend of job losses. More substantial jobs gains over the coming years may be realized from
the expansion of the California Film Tax Credit. There has been a steady rise in local
production since the end of the recession. In 2013, total production days (including film, TV,
commercials and other categories of video) increased by 11.7% to 51,670 days. Over the first
half of 2014, permitted production days were up by 7.5% compared with the same period in
2013.
International Trade
As America’s gateway to Asia, international trade plays an important role in the Los Angeles
6538
economy. Thousands of jobs in the region depend on the flow of goods in and out of the San
Pedro Bay ports. Two-way trade through the Los Angeles Customs District hit a record-setting
volume of $414.5 billion in 2013, and is forecast to reach $423.4 billion this year and $442.2
billion in 2015. The increase in two-way trade will bring additional jobs in logistics, goods
movement, wholesaling and distribution. The long-term prospects for international trade are
promising. The region’s major trading partners are growing and domestic demand is on the
rise; public and private entities are investing heavily in trade-related infrastructure and
important new trade agreements in place or currently being negotiated, have the potential to
increase employment in the region and generate new wealth.
Professional Services and Technology
In terms of employment, the professional services super-sector is the second largest in Los
Angeles County with over 590,000 workers in 2013. It is also one of the fastest growing,
offering jobs across a wide range of skill and income levels. There are three major subsectors
in this group: professional, scientific and technical services; management of enterprises; and
administrative, support and waste services. All three have posted significant year-to-date
(through July) employment gains.
Professional, scientific and technical services includes legal, accounting, architecture,
computer systems design, consulting, research and advertising. Over the first seven months
of this year, employment averaged 282,200 workers, an increase of 3.3% over the same
period a year ago. Management of enterprises, which encompasses corporate headquarters,
experienced a 3.8% jump in employment (to 59,600 workers) over the same period.
The largest increase in job counts was in the administrative, support and waste services
sector. Average monthly employment during the first seven months of 2014 was 265,700
workers, an increase of 6.0% compared with the same period in 2013. Most of the growth in
this subsector was attributable to a 7.5% increase in jobs at employment services firms
(temporary agencies), which accounts for nearly 40% of total job counts in administrative,
support and waste services. The continuing growth of temporary jobs is an indication that
some employers are still reluctant to take on full time employees. In other cases, employers
have found that for certain positions, there is more flexibility and lower costs associated with
taking on a “temp”.
Looking Ahead
After several difficult years of recession and recovery, a sense of optimism and newfound
energy has returned to Los Angeles County. Tourism is booming as record numbers of visitors
fill hotels and restaurants across the region. The region’s health care sector is also thriving
and employment is expanding rapidly. Los Angeles County is home to a number of widely
respected medical research and treatment facilities that drive innovation and bring money into
the region. Los Angeles has also developed a promising array of tech start-ups that are
attracting increasing amounts of venture capital. While still facing a number of challenges
common to most large American metro regions, Los Angeles County is slowly shaking off the
effects of the recession and setting its sights on the future.
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67