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FY 2023-24 Third Quarter Budget Report and Proposed Appropriation Adjustments
<br />June 4, 2024
<br />Page 3
<br />Through March 31, 2024, the City received $253.7 million in General Fund revenues,
<br />which is 63.3% of annual estimates. After analyzing revenues through March 2024, staff
<br />has adjusted estimates for various revenues to align with expectations. In particular,
<br />Sales Tax has continued a downward trend, with lower tax receipts across most
<br />economic segments, particularly in general retail and transportation. This declining trend
<br />is not expected to change until later in 2024.
<br />• The original budget estimate for Bradley -Burns was $67.7 million. The First
<br />Quarter and Mid -Year budget report included overall adjustments to reduce the
<br />revenue estimate by $3.6 million. With the most recent quarterly update, the
<br />City's Sales Tax consultant noted a decrease in the Transportation and General
<br />Retail (i.e., New Auto Sales) sectors. Therefore, the City's Sales Tax consultant
<br />is projecting a further reduction of $1,626,700, bringing the revised Sales Tax
<br />estimate to $59,415,306.
<br />• The original budget estimate for Measure X was $88.6 million. The First Quarter
<br />and Mid -Year budget report included overall adjustments to reduce the revenue
<br />estimate by $2.9 million. With the most recent quarterly update, the City's Sales
<br />Tax consultant noted a decrease from the Transportation and General Retail
<br />(i.e., New Auto Sales) sector. Therefore, the City's Sales Tax consultant is
<br />projecting a further reduction of $2,333,460, bringing the revised Sales Tax
<br />estimate to $83,360,040.
<br />• Due to a higher -than -anticipated payment from Southern California Gas
<br />Company, the estimate for the annual Franchise payment can be increased by
<br />$247,465 for a revised total budget of $797,465. The higher payment is attributed
<br />to a prolonged winter with below average seasonal temperatures, resulting in
<br />higher demand.
<br />• The annual Electric Franchise payment from Southern California Edison was also
<br />higher than originally estimated due to the multiple rate increases that occurred
<br />in 2023. Therefore, staff is recommending an increase of $417,090 bringing the
<br />new estimate to a total of $1,817,086.
<br />• Because the Utility Users Tax is imposed on the consumer, Southern California
<br />Edison's rate increases have also affected Utility Users Tax -Electric revenue,
<br />resulting in consumers paying more than originally projected. Consequently, staff
<br />is recommending a further increase of $500,000, bringing the revised total
<br />budget to $17,300,000.
<br />• Investment earnings continue to outpace estimates due to higher interest rates
<br />and American Rescue Plan Act (ARPA) cash balances. Many of the City's
<br />projects funded with ARPA take time to complete (e.g. Main Library renovation
<br />and Memorial Park), which means the City has been holding ARPA cash. Due to
<br />these two factors, staff is comfortable increasing estimates by $1,000,000, for a
<br />new total of $4,900,000.
<br />• Based on actual and expected collections, staff proposes increasing permit
<br />revenues by $1,458,900. This is primarily due to large construction projects for
<br />residential and mixed -use development on The Warner, 4th & Mortimer, The
<br />Legado at the Met, Central Pointe, and Third & Broadway. The plan check
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