SR - - FY 2015-16 FINANCIAL STATUS UPDATEpP 0
a AGENDA ITEM
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UNTy G
October 13, 2015
ReviewedNerified
City Manager /C/
TO: Honorable Mayor and Finance Directo Ci
Members of the City Council To Be Presented By
THRU: Rick Otto Susan Rivera
City Manager Cons Calendar _ City Mgr Rpts
Council Reports _ Legal Affairs
FROM: William M. Kolbow � Boards /Cmtes _ Public Hrgs
Finance Director X Admin Reports Plan/Environ
1. SUBJECT
Financial status update for Fiscal Years 2015 and 2016.
2. SUMMARY
This report provides a summary of the City's General Fund year -end for Fiscal Year 2014 -15
(FY15) and a status update for Fiscal Year 2015 -16 (FY16).
13. RECOMMENDED ACTION
Receive and file.
14. FISCAL IMPACT I
None.
5. STRATEGIC PLAN GO
2 — Be a fiscally healthy community
2(b): Analyze future fiscal needs and potential revenue opportunities
16. GENERAL PLAN IMPLEMENTATION
None.
ITEM 1.1 1 10/13/15
7. DISCUSSION and BACKGROUND
FY15 General Fund Revenues
FY15 results present a positive reflection of the ongoing economic rebound as the General Fund
concluded the year $1.4 million more in revenue than expected. Several key indicators of
economic activity, including sales tax, transient occupancy tax, and fees for services, ended the
year above budget. Sales tax receipts, our largest source of General Fund revenue, closed at $40.4
million, $802,000 above budget. The increase was primarily the result of higher receipts from car
sales, fuel distribution sales, building and construction materials, as well as an overall improved
economy. Property tax, our second major source of General Fund revenue, closed at $23.0 million,
$251,000 more than budgeted. We received higher than anticipated property tax revenue for the
City due to the rebounding real estate market and annual increases in assessed property values.
The Transient Occupancy Tax budget of $3.7 million exceeded expectations as we collected $4.5
million due to more business and leisure travel. Miscellaneous Revenues were budgeted at
$776,000, while actual collections were $1.4 million. The increase was primarily due to higher
than expected reimbursements from the Office of Emergency Services for costs incurred by the
City while fighting fires on behalf of other agencies, and other reimbursements for damage to City
properties.
FY15 General Fund Expenditures
The expenditure side of the ledger showed another year of savings. City -wide the departments did
an exceptional job at keeping spending down while providing excellent customer service,
continuing efforts to maintain and seek out cost - saving measures, while sustaining optimal service
levels. As such, FY15 General Fund expenditures ended the fiscal year $4.8 million less than
budgeted which was $3.3 million more than was anticipated in June 2015 at the time of FY 16
Budget adoption. Several departments reflected significant savings including the Police
Department with year -end expenditures $2.2 million under budget, Community Services $1.0
million under budget, and Community Development at just under $400,000. A major portion of
these savings are due to extended position vacancies that exist within these departments.
FY15 Fund Balance
During the FY16 budget preparation, it was anticipated the General Fund would end FY15 with
$4.7 million in unreserved fund balance available (FBA) and an estimated $1.9 million FBA at the
conclusion of FY 16. After final numbers were calculated, FY15 performed better than expected
with revenues at $100.4 million and expenditures at $93.6 million, resulting in a revised FY15
FBA of $8.7 million. The following is a comparative illustration for FY15:
ITEM . 2 10/13/15
Adopted Original Estimate Year -End
Budget for FY 15 for FY 15 Actual for FY 15
FY15 (June 2014) (June 2015) (October 2015)
Beg Fund Balance $10,082,910* $15,573,320 $15,573,320
Revenues 96,146,631 99,000,922 100,393,863
Expenditures 95,988,898 97,347,649 94,744,419
Transfers 8,561,393 12,061,393 12,061,393
Catastrophic Reserve 500,000 500,000
Ending Fund Balance $1,679,250 $4,665,200 $ 8,661,371
* Amount does not reflect operating carry - forwards and final year -end results.
With the unanticipated increase in fund balance, staff will be recommending a mid -year budget
adjustment of $4.0 million which will reduce the unreserved year -end estimated FBA for FY16
back to $4.6 million. Specifically, staff plans to recommend to City Council a mid -year unreserved
fund transfer to the following funds:
$1,000,000 PERS — Accrued Liability Fund (760)
$1,500,000 Capital Improvement Projects Fund (500)
$1,500,000 Business Investment Fund (115)
These transfers will provide funding to those areas having either limited resources and/or a specific
need in the immediate future. The proposed transfer of $1.0 million to the Accrued Liability Fund
is for PERS employee retirement benefits which could be used to help lower the City's PERS
underfunded liability amount (see related agenda item). The proposed transfer of $1.5 million to
the Capital Improvement Projects (CIP) Fund is consistent with recent City Council practice to
invest in the City's aging infrastructure. Finally, the proposed transfer of $1.5 million to the
Business Investment Fund is to meet our future obligations related to sales tax cost sharing
agreements that have been executed in recent years to attract and retain businesses to Orange.
FY16 Status Update
As the economy continues its slow but steady recovery, the most current FY16 revenue estimates
reflect an increase of $1.4 million, from $102.3 million to $103.7 million. The increases are in
sales tax, due to the final reconciliation of the triple flip unwind, and in Transient Occupancy Tax,
a result of the stronger economy. Expenditures are tracking as anticipated at $101.6 million;
however, as recent experience has proved, staff expects continued savings in this area. As a result,
it is anticipated that by year -end for FY16, revenues will exceed expenditures by approximately
$2.1 million. While staff will present the mid -year adjustment in early 2016, the current revised
FY16 year -end unreserved FBA of the General Fund is estimated at $3.3 million, $1.4 million
more than the adopted budget estimate of $1.9 million. It should be noted that these estimates do
not reflect any impact of the current labor negotiations, which once settled will likely increase the
FY16 expenditure amounts.
8. ATTACHMENTS
None.
ITEM 3 10/13/15