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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: �_..__. \ � �` � .��'."-�^---�� , � � ,� 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 u a � 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: , - _ r���T��� r���r� a��; � -- -- 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