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Home My WebLink AboutReport - Spcl Gas Tax - Trffc Cngstn Relief, Prop 1B CITY OF PALM DESERT ' '' � � � FINANCE DEPARTMENT STAFF REPORT REQUEST: RECEIVE AND FILE THE STATE CONTROLLER'S REPORT OF THE CITY OF PALM DESERT'S SPECIAL GAS TAX STREET IMPROVEMENT FUND FOR THE PERIOD OF JULY 1, 2008 THROUGH JUNE 30, 2013, TRAFFIC CONGESTION RELIEF FUND ALLOCATIONS FOR THE PERIOD OF JULY 1, 2008 THROUGH JUNE 30, 2011, AND PROPOSITION 1B ALLOCATIONS FOR THE PERIOD OF JULY 1, 2007 THROUGH JUNE 30, 2013 DATE: FEBRUARY 27, 2014 SUBMITTED BY: PAUL S. GIBSON, FINANCE DIRECTOR CONTENTS: INDEPENDENT ACCOUNTANTS' REPORT ON AGREED-UPON PROCEDURES Recommendation By Minute Motion, that the City Council receive and file the State Controller's Report of the City of Palm Desert's Special Gas Tax Street Improvement Fund for the period of July 1, 2008 through June 30, 2013, Traffic Congestion Relief Fund Allocations for the period of July 1, 2008 through June 30, 2011, and Proposition 1B Allocations for the period of July 1, 2007 through June 30, 2013 Committee Recommendation The Audit, Investment and Finance Committee received the State Controller's Report at their January 28, 2014 meeting, and it was recommended that the report be received and filed by the City Council. Backqround The Controller's Office of the State of California conducted a pertormance audit to determine whether specific funds were expended in compliance with Article XIX of the California Constitution,the Streets and Highways Code, Revenue and Taxation Code section 7104, and Government Code section 8879.23. The scope of the audit was limited to planning and performing the audit procedures necessary to obtain reasonable assurance that the city accounted for and expended the funds for the above-mentioned procedures in accordance with their respective government code sections. The audit found that the City accounted for and expended the funds appropriately with no findings. Staff requests that the City Council receive the State Controller's Report of the City of Palm Desert's Special Gas Tax Street Improvement Fund for the period of July 1, 2008 through June 30, 2013, Traffic Congestion Relief Fund Allocations for the period of July 1, 2008 through June 30, 2011, and Proposition 1 B Allocations for the period of July 1, 2007 through June 30, 2013, and recommend that the report be received and filed by the City Council. G:\Finance\Niamh Ortega\Staff ReportsWudit staff reportsWudit Staff Reports 2013\SR-Council audit 2013 gas tax traffic Prop 1 B.docx Staff Report Receive and File - State Controller's Report- Gas Tax, Traffic Congestion, Prop 1 B February 27, 2014 Page 2 of 2 Fiscal Analysis There is no fiscal impact as a result of this action. Submitted by: Paul S. Gibson, Director of Finance/City Treasurer Approved: /� - (� � � J M. Wohlmuth, City Manager � CITY COUNCILACTION APYROVED n[:Nif�'D RECEIVED `�-�+��-� OTNF,R MF;ETING DATE �� -��'� AYF.S: GJ� � NOES:�nn� ABSENT: ��=» �- ABSTAIN:-N n�� - VERIFIED BY: �-{ Original on File with City Clerk's O ice (:�\Fin�nrc\Ali�mh(lrton�\R4�ff Rcnnrfe\Anr�i4 ctoff rcnnhc\�ivlif C4nff Rcnnrtc 9l11'2\RR_Cniinril�iirli4 9MZ n�c f�v 4ro{fir Prnn 1 R rinry �' 1 �� ; CITY OF PALM DESERT ; , Audit Report ' SPECIAL GAS TAX STREET IMPROVEMENT FUND July 1, 2008, through June 30, 2013 TRAFFIC CONGESTION RELIEF FUND ALLOCATIONS July 1, 2008, through June 30, 2011 PROPOSITION 1B ALLOCATIONS July 1, 2007, through June 30, 2013 0� ``E pEKA C'O�� V '+:•O V+ ' < 4 m ' � g,��b, � z 1 �' +�' � * � ...- Q �'a __W�. .•.; -� �� 9�, ' �c •�� O �F CAL�� I JOHN CHIANG California State Controller �� ' January 2014 � � , :� f tMt. O � ~J . 6::..., �.9p . O— � � 'f • p�e �� Cl.�� JOHN CHIANG C��xlif�xnitt �ttt#� C��n#xn11�r January 8, 2414 The Honorable Jan Hamick Mayorof the City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 Dear Mayor Harnick: The State Controller's Office audited the City of Palm Desert's Special Gas Tax Street Improvement Fund for the period of July 1, 2008,through June 30, 2013. We also audited the Traffic Congestion Relief Fund(TCRF) allocations recorded in the Special Gas Tax Street Improvement Fund for the period of July 1, 2008, through June 30, 2011, and the Proposition 1B allocations, also recorded in the Special Gas Tax Street Improvement Fund, for the period of July 1, 2007, through June 30, 2013. Our audit found that the city accounted for and expended its Special Gas Tax Street Improvement Fund in compliance with requirements, and that no adjustment to the fund is required. . If you have any questions,please contact Steven Mar, Chief, Local Government Audits Bureau, by phone at(916) 324-7226. Sincer 1 , FFREY V. BROWNFIELD, CPA Chief, Division of Audits JVB/sk cc: Paul Gibson, Finance Director/City Treasurer City of Palm Desert . Special Gas Tax Street Improvement Func� Traff:c Congestion City ofPalm Desert ReliefFz�ndAllocations,and Proposition IBAllocations Contents Audit Report , Summary ............................................................................................................................ 1 Background........................................................................................................................ 1 Objective, Scope,and Methodology................................................................................. 2 Conclusion.......................................................................................................................... 2 Follow-Up on Prior Audit Findings................................................................................. 3 Views of Responsible Official........................................................................................... 3 RestrictedUse .................................................................................................................... 3 Schedule 1—Reconciliation of Fund Balance...................................................................... 4 Specia!Gas Tax Street Improvement Fund Tra�c Congestion � City ojPalm Desert Relfef Fund A!locations,and Proposition IB Allocations Audit Report Summary The State Controller's Office audited the City of Palm Desert's Special Gas Tax Street Improvement Fund for the period of July 1, 2008, through June 30,`2013. We also audited the Traffic Congestion Relief Fund (TCRF) allocations recorded in the Special Gas Tax Street Improvement Fund for the period of July 1, 2008, through June 30, 2011, and the Proposition 1B allocations, also recorded in the Special Gas Tax Street Improvement Fund, for the period of July 1, 2007, through June 30, 2013. Our audit found that the city accounted for and expended its Special Gas Tax Street Improvement Fund in compliance with requirements, and that no adjustment to the fund is required. BaCkgi'Ouild The State apportions funds monthly from the highway users tax account in the transportation tax fund to cities and counties for the construction, maintenance,and operation of local streets and roads. The highway users taxes derive from state taxes on the sale of motor vehicle fuels. In accordance with Article XIX of the California Constitution and Streets and Highways Code section 2101, a city must deposit all apportionments of highway users taxes in its Special Gas Tax Street Improvement Fund. A city must expend gas tax funds only for street-related purposes. We conducted our audit of the city's Special Gas Tax Street Improvement Fund under the authority of Govemment Code section 12410. Government Code section 14556.5 created a Tr�c Congestion Relief Fund in the State Treasury for allocating funds quarterly to cities and counties for street or road maintenance, reconstruction, and storm damage repair. Cities must deposit funds received into the city account designated for the receipt of state funds allocated for transportation purposes. The city recorded its TCRF allocations in the Special Gas Tax Street Improvement Fund. We conducted our audit of the city's TCRF allocations under the authority of Revenue and Taxation Code section 7104. Senate Bill 1266 Highway Safety, Traffic Reduction, Air Quality, and Port Security Bond Act of 2006, was introduced as Proposition 1 B and approved by the voters on November 7, 2006, for a variety of transportation priorities, including the maintenance and improvement of local transportation facilities. Proposition 1B funds transferred to cities and counties shall be deposited into an account that is designated for the receipt of state funds allocated for streets and roads. The City recorded its Proposition 1B allocations in the Special Gas Tax Street Improvement Fund. A city also is required to expend its allocations within three years following the end of the fiscal year in which the allocation was made and to be expended in compliance with Government Code section 8879.23. We conducted our audit of the City's Proposition 1B allocations under the authority of Government Code section 12410. -1- Special Gas Taz Street Improvement Fund, Tra�c Congestion City of Palm Desert Relief Fund Allocatioru,and Proposition 1 B Allocations Objective, Scope, Our audit objective was to determine whether the city accounted for and and Methodology expended the Special Gas Tax Street Improvement Fund in compliance with Article XIX of the California Constitution, the Streets and Highways Code, Revenue and Taxation Code section 7104, and Government Code section 8879.23. To meet the audit objective, we determined whether the city: • Properly deposited highway users tax apportionments and other appropriate revenues in the Special Gas Tax Street Improvement Fund; • Expended funds exclusively for authorized street-related purposes; and • Made available unexpended funds for future expenditures. We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. We did not audit the city's financial statements. We limited our audit scope to pla.nning and performing the audit procedures necessary to obtain reasonable assurance that the city accounted for and expended the Special Gas Tax Street Improvement Fund in accordance with the requirements of the Streets and Highways Code, Revenue and Taxation Code section 7104,and Government Code section 8879.23.Accordingly, we examined transactions, on a test basis, to determine whether the city expended funds for street purposes. We considered the city's internal controls only to the extent necessary to plan the audit. Conclusion Our audit found that the City of Palm Desert accounted for and expended its Special Gas Tax Street Improvement Fund in compliance with Article XIX of the California Constitution and the Streets and Highways Code for the period of July l, 2008,through June 30, 2013. � Our audit also found that the city accounted for and expended its TCRF allocations recorded in the Special Gas Ta�c Street Improvement Fund in compliance with Article XIX of the California Constitution, the Streets and Highways Code, and Revenue and Taxation Code section 7104 for the period of July 1,2008,through June 30,2011. In addition, our audit found that the city accounted for and expended its Proposition 1 B allocations recorded in the Special Gas Tax Street Improvement Fund in compliance with Government Code section 8879.23 for the period of July 1, 2007, through June 30, 2013. -L- Special Gas Tax Street Improvement Func� Tra�c Congestion � City o1'Palm Desert ReliefFund Allocations, and Proposition IB Allocations Follow-Up on Prior Our prior audit report, issued on May 19,2010,disclosed no findings. Audit Findings Views Of We discussed the audit results with city representatives during an exit Responsible conference on December 11, 2013. Jose Luis Espinoza, Assistant Einance Director, agreed with the audit results. Mr. Espinoza further Official agreed that a draft audit report was not necessary and that the audit report could be issued as final. Restricted Use This report is intended for the information and use of the City of Palm Desert's management and the SCO; it is not intended to be and should not be used by anyone other than these specified parties. This restriction is not intended to limit distribution of this report, which is a matter of public record. FFREY V. BROWNFIELD, CPA Chief,Division of Audits January 8,2014 -3- • Special Gas Tax Street Improvement Func� Traffic Congestion Ciry of Palm Desert Relief Fund Allocations,and Proposition 1 B Aflocations Schedule 1— Reconciliation of Fund Balance July 1, 2012, through June 30, 2013 Special Gas Tax Street Improvement Fund Highway Users Tax Proposition 1B Allocation I Allocation 2 Totals Beginning fund balance per city $ 195,551 $ 739,630 $ 935,181 Revenues 1,176,263 — 1,176,263 Total funds available 1,371,814 739,630 2,111,444 Expenditures (766,624) — (766,624) Ending fund balance per city 605,190 739,630 1,344,820 Total SCO adjustment — — — Ending fund balance per audit $ 605,190 $ 739,630 $ 1,344,820 ' The city receives apportionments from the State highway users tax account, pwsuant to Streets and Highways Code sections 2103,2105,2106,2107,and 2107.5.The basis of the apportionments varies,but the money may be used for any street purpose. Streets and Highways Code section 2107.5 restricts apportionments to administration and engineering expenditures, except for cities with populations of fewer than 10,000 inhabitants. Those cities may use the funds for rights-of-way and for the construction of street systems. The audit period was July 1,2008, through June 30,2013;however,this schedule includes only the period ofJuly 1,2012,through June 30,2013. 2 Senate Bill 1266, Highway Safety, Traffic Reduction, Air Quality, and Port Security Bond Act of 2006, introduced as Proposition 1B, provided funds for a variety of transportation priorities. The Proposition 1B allocations were recorded in the Special Gas Tax Street Improvement Fund. The audit period was July 1, 2007, through June 30,2013. -4-