Item 43 - FY 2023-24 Mid Year Budget Update

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FY 2023-24 Mid -Year Budget Update, Appropriation Requests, and Workforce Changes February 20, 2024 Page 3 estimate by $2.2 million. The City's Sales Tax consultant has noted a decrease from General Retail (i.e., Drug Stores) and Transportation (i.e., New Auto Sales) sectors. Therefore, staff has further adjusted the FY 2023-24 revenue estimate to $61,042,042 (a further budget reduction of $1,473,350). Sales Tax (Measure X) The original budget estimate for Measure X was $88.6 million. The First Quarter Budget report on November 7, 2023 included an adjustment to reduce revenue estimate by $2.7 million. The City's Sales Tax consultant has noted a decrease from Business to Business (i.e., Building Materials) sector. Therefore, staff has adjusted the FY 2023-24 revenue estimate to $85,693,500 (a further budget reduction of $222,900). Property Tax, Property Tax in lieu of VLF (VLF) The City receives its first 50% allocation from the State in January and can now accurately forecast the total revenue for the fiscal year. The City has received the January payment and staff has increased the annual revenue estimate by $711,950. Paramedic Service Charge Revenue related to ambulance transports continues to exceed expectations. As noted in the FY 2022-23 Third Quarter Budget Report on May 16, 2023, a new federal program with higher reimbursement rates became effective January 1, 2023. Partial funding for that new program comes from up -front discretionary contributions from cities providing ambulance service. As long as enough cities are making a discretionary contribution, the program will continue to provide higher reimbursement rates to all. The City will continue to benefit from the new program even though the City has not made the discretionary contribution. The City's estimated discretionary contribution to the program is $2.9 million. At this time, based on actual receipts, staff has increased the annual revenue estimate to $10 million, which is an additional increase of $1.4 million. As part of the budget process, staff will bring more information to City Council regarding the discretionary contribution. General Fund Expenditures A summary of General Fund expenditures follows. Much of the City's budget is for employee compensation, which would support approximately 50% spending at December 31. The City typically pays invoices one month or so after the relevant service period, which supports approximately 42% spending at December 31. Two notable exceptions follow: • The City pays for Fire Services one month in advance (or 58% at December 31). • The City Clerk budget includes election costs, typically paid late in the fiscal year. Based on the mix of expenditures, overall spending of 47% at December 31 is appropriate. Discussion is included below for a handful of recommended adjustments to appropriations.