HomeMy WebLinkAboutFY 2009/10 - Projected PD General Funds Revenues CITY OF PALM DESERT
FINANCE DEPARTMENT
STAFF REPORT
REQUEST: REVIEW OF PROJECTED CITY OF PALM DESERT GENERAL FUND
REVENUES FOR FISCAL YEAR 2009-2010
SUBMITTED BY: Paul S. Gibson, Finance Director
DATE: December 10, 2009
CONTENTS: Palm Desert Estimated Revenues Worksheet
Palm Desert Financial Policy
Recommendation
By Minute Motion, receive and file report on projected General Fund revenues for
Fiscal Year 2009-2010.
Backqround
Staff has completed a preliminary review of the City's General Fund revenue estimates (first four
months ending October 31, 2009). It is the request of the City Council that the Finance
Department provide an update on the City's revenues on a quarterly basis.
Mid-Year
Oriqinal Budqet August Revision Revised Budget
Sales Tax 15,900,000 13,600,000
T.O.T. 8,000,000 6,700,000
Property Tax 5,700,000 5,200,000
Interest 1,295,000 1,295,000
Transfers 2,586,000 2,586,000
Franchises 2,950,000 2,800,000
State Subventions 3,700,000 3,700,000
Building Permits 950,000 950,000
Reimbursement 2,626,000 3,300,000
Business License 1,325,000 1,200,000
Timeshare 900,000 1,000,000
Plan Check 300,000 300,000
Property Transfer 500,000 350,000
Other Revenue 250,000 500,000
Total Revenues $46,982,000 $46,982,000 $43,481,000
Total Expenses $46,957,546 $46,200,260 6.5% reduction
Staff Report
Review of Projected General Fund Revenues for FY 2009-2010
December 10, 2009
Page 2 of 3
Staff has distributed a memorandum to the various departments and divisions requesting that
staff review all departmental budgets and programs to determine if there is any expenditure that
can be reduced. Once the City Manager has reviewed the potential adjustments with each
department, staff will bring back a revised Mid-Year budget to City Council in January 2010. One
possible solution is to negotiate with the Palm Desert Employee Organization to open up the MOU
for potential salary/benefit savings. Other possibilities include the consideration of using excess
reserves to cover the portion staff is unable to reduce without affecting city programs (June 30,
2009 General Fund Reserve - $57,011,988 versus reserve requirement of 46,200,260—General
Fund Appropriations, over 10 million excess reserve). Additionally, staff is recommending that
we defer transferring our replacement equipment reserve cost (depreciation - $210,000) and our
departmental retiree health allocation transfer (sufficient funds available in fund without
transferring allocation - $495,000).
Following is a summary of the review of each of the major revenues:
Sales Tax
Last year sales tax dollars amounted to $14,474,933, which included the State's adjustment of
$486,000 for the triple flip/true-up adjustments. This year staff estimates a total of $13,600,000.
Most of the reduction this year is due to the 2"d quarter in 2009 which compares to last year where
the downturn in the economy had not yet hit. The 4'h quarter 2009 and the 1St quarter 2010 will
give a true indication of what we can expect for the current year's sales tax.
Transient Occupancv Tax
All of Palm Desert's major hotels have decreased occupancy in comparison between 2007-2008
and 2008-2009 ($8,605,714 in FY 07-08 versus last year of $7,030,048). An additional 5%
reduction over last year is forecasted for this year.
Propertv Taxes
Property tax decreased last year ($4,895,863) due to a one-time adjustment by the County for a
prior year error for No-Low property tax calculation. This amounted to a $500,000 deduction.
The County has estimated that our current year property tax amount would be approximately
$5.561 million. This is based on what the County provided for the State's 8% Proposition 1A
take-away.
Franchises
Staff is forecasting no change from last year's actual amount ($2,818,729). Last year decreased
due to lower fuel cost for Edison and the Gas Company.
State Subventions
This forecast is based on information provided by the State and County.
Interest and Rental Income
Interest rates continue to be lower due to the Federal Reserve policy. The forecast reflects a one
percent (1%) return on General Fund reserves, Redevelopment Agency advance interest
payment.
Reimbursements
Three quarters of the reimbursement is from the Redevelopment Agency; therefore, no changes
are recommended.
Staff Report
Review of Projected General Fund Revenues for FY 2009-2010
December 10, 2009
Page 3 of 3
Fiscal Analvsis
Estimated budgeted revenue is projected to be lower than originally estimated by $3,501,000.
Prior budget adjustment relative to early retirements reflected a budget surplus of $878,000,
which would leave an estimated $2,623,000 reduction required in budgeted expenditures by
various department budgets.
Submitted By: Approval:
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, � � ,�
aul S. Gibson, Finance Director/City Treasurer ;Jp'�n M. Wohlmuth, City Manager
�..
CiTY COUNCILA�'G`I'ION
APPROVED DEI�TIED
RECEIVED OTHER
MEETING DATE '�' �'U
AYES: i1Srt�Y iZilrC iYl�,,K�`cS��,�/�!�i7Cr�Z/w
NOES:
ABSENI: �� .�_.._..+ �
AB5TAIN:
VERIFIED BY:
Original on File with City lerk's Office
PALM DESERT ESTIMATED REVENUES, Exhibit 1
Actual Actual Actual Budget Projected
CATEGORY/FUND FY 06-07 FY 07-08 FY 08-09 FY 09-10 FY 09-10
General Fund•
1. Sales tax 17,918,375 17,195,742 14,474,933 15,900,000 13,600,000
2.Transient occupancy tax 8,627,221 8,605,714 7,030,048 8,000,000 6,700,000
3. Property tax 5,380,481 5,648,626 4,895,863 5,700,000 5,200,000
4. Interest&Rental Income 4,740,689 4,758,617 2,142,915 1,295,000 1,295,000
5.Transfers in(Gas,Starvvood,Office, Int.) 1,130,024 1,101,610 2,684,568 2,586,000 2,586,000
6. Franchises 2,907,062 2,887,727 2,818,729 2,950,000 2,800,000
7. State subventions(VLF) 3,998,005 3,944,569 4,054,502 3,700,000 3,700,000
8. Building&grading permits 2,551,181 1,747,864 1,076,708 950,000 950,000
9. Reimbursements 3,212,520 5,402,027 3,323,620 2,626,000 3,300,000
10. Business license tax 1,294,466 1,349,962 1,258,688 1,325,000 1,200,000
11.Timeshare mitigation fee 782,739 881,350 949,871 900,000 1,000,000
12. Plan check fees 617,999 562,930 389,770 300,000 300,000
13. Property transfer tax 671,806 604,236 324,817 500,000 350,000
14. Other revenues 77,398 163,303 1,415,671 250,000 500,000
Totals General Fund 53,909,966 54,854,277 46,840,703 46,982,000 43,481,000
Fire Tax Fund:
1. Structural Fire Tax 5,077,402 5,516,542 5,381,363 5,270,000 5,270,000
2. Prop.A. Fire Tax 1,592,526 1,620,168 1,628,841 2,039,000 2,039,000
3. Reimbursements 682,547 662,882 755,975 716,212 756,000
4. Interest Income 115,203 165,729 82,677 50,000 50,000
5. Interfund Transfers In 1,852,000 1,650,000 - -
Totals Fire Tax Fund 9,319,678 9,615,32'F 7,848,856 8,075,212 8,115,000
TOTAL FIRE AND GENERAL FD 63,229,644 64,469,598 54,689,559 55,057,212 51,596,000
Page 1-29
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CITY OF PALM DESERT
FINANCE pEPARTMENT
STAFF REPORT
REQUEST: ADOPT THE CITY OF PALM DESERT FINANCIAL POLICY AS
PRESENTED
SUBMITTED BY: PAUL S. GIBSON, FINANCE DIRECTOR
DATE: MARCH 27, 2008
CONTENTS: PALM DESERT FINANCIAL POLICY
Recommendation:
That the City Council adopt the City of Palm Desert Financial Policy as
presented.
Background:
The City of Palm Desert follows certain procedures with regard to its reserves in order
to maintain a healthy fiscal state. Adoption of those procedures in the form of a
financial policy ensures that those procedures are in place and followed appropriately,
and that the City remains in compliance with associated auditing standards.
The Financial Policy was presented to the Audit, Investment and Finance Committee for
review at its meeting of March 25 2008 and recommends that the City Council adopt
the policy as presented. �ITY COUNCIL ACTIOTv�
AFPROV�i� '� ✓ DENI�L
1�ECIZIVED � QTHER �
Submitted by: , - _
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a���s: �� ��F��� �4�.+-kC�l--y�� .�f��.,5�2_
av���e� �._`----- �
Paul S. Gibson, Finance Director Aa����'�_ 4U��,1� �V-�-��-�"�"�v�
��S�'A I N: 1�t�� _�. - --------- - -
VERI�'�ED �Yo �—
Approved by: p�;����� ��, Fi�e w t;h(Ci-�� Cle�k' s office
*Remove d for separate co�sideration, then APPROVED as
amended to reflect maintaining a designated General
Fund working capital reserve equivalant to 100� of th�
Carlos L. Ortega, ity Manager General Fund's Operating Budget cumulatively, 5-0 �
nmo
G:\Finance\Niamh Ortega\Staff Reports\SR-Financial Policy Adoption 032508.Doc
City of Palm Desert Financial Policy Fiscal Year 2007-2008
1.0 Policy Statement:
It is the Financial Policy of the City of Palm Desert, Palm Desert Redevelopment
Agency, Palm Desert Housing Authority, Palm Desert Financing Authority, and Palm
Desert Recreational Facilities Corporation (hereafter referred to collectively as the
"City") to:
(1) Minimum Fund and Working Capital Balances. We will maintain a
designated General Fund working capital reserve equivalent to 20% of the
General Fund's operating budget and a designated emergency reserve
equivalent to 5% of the General Fund's operating budget. This is considered
the minimum level necessary to maintain the City's credit worthiness and to
adequately provide for:
a. Economic uncertainties, local disasters, and other financial hardships
or downturns in the local or national economy.
b. Federal/State Budget cuts (such as the State issuing IOUs,
Educational Revenue Augmentation Fund (ERAF) transfers, etc.
c. Contingencies for unseen operating or capital needs.
d. Maintaining this minimum will also allow the City to continue to earn a
certain level of investment earnings and provide sufficient cash flow
reserves (July to January).
e. The emergency reserve would be available only as a temporary
revenue source to be used while an orderly financial plan for cost-
reduction or revenue enhancement is developed.
(2) Balance Budget. We will maintain a balanced operating budget for all
governmental funds with recurring revenues equal to or greater than recurring
expenditures. Budget will be submitted to City Council on or before June 1
and approved by City Council on their last meeting in June. City Council
adopts the budget by department for General Fund and all other funds by the
total appropriations of said fund. City Manager has authority to transfer
budget befinreen line item budgets. Undesignated fund balances shall be
appropriated for one-time expenditures, preferably only on capital
improvement items.
(3) Equipment/Vehicle Replacement. We will require that each Internal Service
Fund that includes vehicles, equipment, and building maintenance have
revenues, (City user charges, interest income, and all other income) sufficient
to meet all cash operating expenses and depreciation expenses. The related
revenues should also be sufficient to maintain cash reserves that provide
sufficient cash to replace vehicles and equipment in accordance with
replacement polices. For General Fund assets, the City will establish and
maintain an Equipment Replacement Fund to provide for the timely �
replacement of vehicles and capital equipment with an individual replacement
cost of$15,000 or more. The annual contribution to this fund will generally be
Page 1 of 2
City of Palm Desert Financial Policy Fiscal Year 2007-2008
based on the annual use allowance, which is determined based on the
estimated life of the vehicle or equipment and its original purchase cost.
Interest earnings and sales of �urplus equipment as well as any related
damage and insurance recoveries will be credited to the Equipment
Replacement Fund.
(4) Adequate Liability Reserve. We will maintain for the purpose of setting
aside resources for costs not covered by the City's insurance programs, such
as claim costs within the City's deductibles, claims and judgments, self-
insured retentions and/or major costs associated with disasters and other
events which will not be reimbursable from insurance or from the Federal or
State government.
(5) Long-Range Financial Forecast. We will maintain a long-range fiscal
perspective through the use of an annual operating budget, a five-year capital
improvement plan, and a five-year financial forecast.
(6) Capital Improvement Plan. We will use Redevelopment Agency long-term
financing methods or cash accumulated in excess of policy requirements for
major capital improvements and acquisitions. These improvements will be
pfanned via the annual five-year capital improvement plan process.
(7) Accounting Principles. We will comply with all the requirements of
"Generally Accepted Accounting Principles".
(8) Enterprise Fund Standards. We will require that all Enterprise Funds (Golf
Operations and O�ce Complex) have revenues (customer charges, interest
income, and all other income) sufficient to meet all cash operating expenses,
depreciation expense, and prescribed cash reserve policies per financial
policies as recommended for each enterprise activity. Additionally, each
Enterprise Fund will maintain debt service coverage requirements set forth in
any related bond covenants.
(9) Future Capital Project Designations. The Council may designate specific
fund balance levels for future development of capital projects, which it has
determined to be in the best long-term interests of the City.
(10) Other Designations and Reserves. In addition to the designations noted
above, fund balance levels will be sufficient to meet funding requirements for
projects approved in prior years which are carried forward into the new year;
debt service reserve requirements; reserves for encumbrances and
Continuing Appropriations in the amount equal to the City's unpaid obligations
and unfinished projects at year-end; reserves designated for compensated
absences; and other reserves or designations required by contractual �
obligations, state law, or generally accepted accounting principles.
Page 2 of 2