Item 30 - Fiscal Year 2021-22: Third Quarter Budget Update

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Receive and file the FY 2021-22 — Third Quarter Budget Update May 3, 2022 Page 3 Online Retailers), Transportation (i.e., New Auto Sales, Service Stations), and Food Products (i.e., Restaurants) sectors. Therefore, a revised estimate will include an increase of both the Bradley -Burns and Measure X revenue estimates by about $3.7 million and $5.2 million, respectively. The sales tax consultant's assumptions for the robust growth in sales tax revenues include growth at a higher rate than pre -pandemic levels in the following areas: Employment, Disposable Income, Gross Domestic Product (GDP), Domestic Tourism, Consumption of and Relative Prices of Taxable Goods. Furthermore, sharp increases in energy prices in 2021 have increased the prices of many taxable goods and the sanctions on Russia as a result of the Russia -Ukraine war is preventing it from exporting oil to the West. It is expected that oil prices will remain high through the second quarter of the 2022 calendar year (April to June 2022). Similarly, as a result of the war, California gas prices have soared in mid -March, which also contributed to the strong performance seen from the Service Stations segment of the Transportation sector. With more people returning to the workforce, price increases to taxable goods and a gradual decrease in inflation, sales tax performance should continue to remain strong through FY 2021-22. Plan Checks: Total plan check revenues collected for the third quarter is $5.2 million, which exceeded the annual budget estimates of $3.4 million by nearly $1.9 million or over 55 percent. The Mid -Year Budget Report approved on March 1, 2022 included adjustments for building plan check estimates. However, due to a one-time spike in plan check activity related to large construction projects for residential and mix -use development on 3rd & Broadway, Rafferty, Warner & Red Hill, 2727 Main Place, and Lacy Crossing, staff has increased the revenue estimates by $1,982,700, accordingly. Staff does not anticipate any new large construction project activity in the forecast for the fourth quarter. General Fund Expenditures As of March 31 2022, General Fund expenditures are at 72.2 percent of budget. Each department is within the expected range of spending for the third quarter. It should be noted that the City pays one -month in advance for contracted fire services. FY 2021-22 Capital Improvement Program (CIP) Staff expects significant carryovers for the Capital Improvement Program (CIP) FY 2021- 22 capital budget to FY 2022-23 as many capital projects require multiple years to construct. Large, unspent appropriations are anticipated to be carried over from the current fiscal year to the next fiscal year in excess of over $228 million and is expected to come before the City Council for approval in September 2022. Full -Time Employee Position Vacancy Report The staff vacancy report as of March 31, 2022 reflects all staffing changes authorized to date, including the Mid -Year Budget Report workforce changes approved on March 1, 2022.