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2020-10-21 City Council Item No. 12.1 City of Menifee Fiscal Year 2020/2021 Quarter 1 Budget Status Presentation Regular MEETING - Additional Meeting MaterialsCity of Menifee FY 20/21 Qtr-1 Budget Status Rochelle Clayton, Deputy City Manager Wendy Preece, Deputy Finance Director Margarita Cornejo, Finance Manager October 21, 2020 PURPOSE OF THE ANNUAL BUDGET ANALYZE CURRENT ECONOMIC CONDITIONS PRIORITIZE SPENDING STRATEGICALLY PLAN USE OF RESOURCES FORECAST REVENUES & EXPENDITURES This process continues through- out the Fiscal Year… FINANCIAL UNCERTAINTY Continually Analyze Current Economic Conditions TOTAL GENERAL FUND REPORTING General Fund + Measure DD = Total General Fund ADOPTED BUDGET -Total General Fund Revenues & Expenditures EXPENDITURES General Fund Operating Expenditures FY2020/21 $49,389,575 Measure DD Expenditures FY2020/21 10,297,000 Total General Fund Expenditures $59,686,575 REVENUES General Fund Operating Revenues FY2020/21 $48,647,945 Transfers from Reserves 741,630 Measure DD Revenues FY2020/21 10,297,000 Total General Fund Revenues $59,686,575 * Includes $150,000 from general plan, $141,630 from the SLESF Grant Fund, and $450,000 from the Waste Management Reserve. Revenue & Expenditure REDUCTIONS: GENERAL FUND with MEASURE DD 2020/2021 ORIGINAL Budget 2020/2021 REVISED Budget Reduction Amount REVENUES 65,098,140 59,686,575 (5,411,566) EXPENDITURES 63,861,254 59,686,575 (4,174,680) Surplus/(Deficit)1,236,886 0 COVID-19 Reduction Recap COVID-19 Reductions to February 2020 Budget Projections Revenue Projection REDUCTIONS: GENERAL FUND REVENUE 2020/2021 ORIGINAL Budget 2020/2021 REVISED Budget Percentage of Reduction Bldg/Plng/Eng Fees 11,870,500 10,683,450 10% Business License 120,000 40,000 67% Fines and Fees 897,500 807,750 10% Franchise Fees 4,200,500 3,872,963 7.8% Miscellaneous Fees 860,420 860,420 0% Property Tax 16,173,725 16,173,725 0% Real Property Transfer Tax 600,000 540,000 10% Recreation Program Fees 323,805 161,903 50% Sales Tax (Bradley Burns)9,112,000 7,971,000 12.5% Transfer In 741,630 741,630 0% Transient Occupancy Tax 365,000 225,880 38% VLF 7,512,060 6,760,854 10% Finance Revenue 550,000 550,000 0% Sales Tax (Measure DD)11,771,000 10,297,000 12.5% REVENUE REDUCTION: 65,098,140 59,686,575 8.3% Total General Fund Revenue Reduction: ($5,411,566) FY 20/21 1st QUARTER BUDGET STATUS Major revenues are not realized in the 1st quarter of the year due to scheduled distributions. •Sales Tax payments –Quarterly (last day of month after quarter ends) •Property Tax payments –December 10th & April 10th Expenditures are slightly delayed due to invoicing times. •Typical 30-day invoicing time from vendor Based on the delays, the quarter-1 report does not reflect the impacts of COVID-19, however it does reflect fees collected, which indicates the development volume. FY 20/21 1st QUARTER BUDGET STATUS (continued) -3- ONE QUARTER REPRESENTS 25% OF THE ANNUAL BUDGET Revenue Status: •Permit fees received are 23% of the annual budget (largest portion of development revenue). •Remaining development fees average 18% of the annual budget. Expenditure Status: •Personnel related expenditures average 23% of the annual budget. •Non-personnel related expenditures average 13% of the annual budget. FY 20/21 1st QUARTER BUDGET STATUS (continued) -3- Careful planning and cautious spending allows the City to remain under budget in expenditures. Internal Reviews of Expenditures •Additional reviews of all invoices prior to approval •Centralized Purchasing and Contract administration •Regular Department performance & budget reviews Deferral of non-critical projects and programs •System upgrades –City’s Financial Accounting System •Expansion plans on hold (new City Hall, Maintenance Ops Center-MOC, etc.) •Capital projects deferred without critical impacts •Smart Cities Initiatives FY 20/21 1st QUARTER BUDGET STATUS (continued) Hiring Freeze on non-critical positions •12 positions were frozen prior to budget adoption •Employees hired this fiscal year were included in the budget or to replace employees: •Sr. Planner •Planning Technician •Public Information Officer •IT Analyst •IT Director •Risk Manager SALES TAX UPDATE –COVID-19 Impacts The change from 2019 to 2020 was -17% for City businesses The change in the County & State Pool was 26.7% The TOTAL combined change for the City was -12% •Electronics decreased by -67.2% •Apparel decreased by -63% & Dept Stores by -55.2% •Home Furnishings decreased by -49.4% •Service Stations decreased by -45.7% •Casual Dining decreased by -31.5% •Sporting Goods increased 66.3% & Grocery by 23.9% April-May-June 20 was 1st full quarter impacted SALES TAX UPDATE –COVID-19 Impacts (continued) Twelve percent (-12%) of sales tax for one quarter of the budget year represents a decrease of $627,000 in revenues. •Annually that amounts to $2,508,000 ($1.1M general fund and $1.4M Measure DD sales tax). Some businesses did not pay their sales tax payments to the state, which is expected to increase next quarter. April-May-June 20 was 1st full quarter impacted The next quarterly update will include the July-August- September 2020 sales tax. Though Riverside County was able to reopen on a limited basis, many businesses will again close this week due to the County reverting to the Purple Tier 1 under the State guidelines, which indicates a continued reduction in sales tax revenue. Next Sales Tax Report SALES TAX UPDATE –COVID-19 Impacts (continued) Menifee Assisting Local Businesses ECONOMIC DEVELOPMENT EFFORTS •Small Business Grant Program through CARES ACT Funding •Business License Fee Waiver Program •Developed SHOP LOCAL website for businesses •Menifee Cares Recover website •MeniFREEwards Restaurant Takeout Program •Community Resources Guide •EconDev Pod Cast to assist businesses •Outreach and Surveys conducted Other Unknown COVID-19 Impacts Transient Occupancy Tax •The Fairfield Inn opened this week Motor Vehicle License Fee •Unknown if non-payments will be a factor Recreation Program Fees •Unknown when full programming will resume *Property Tax is stable due to the County’s Teeter program. Revenues with Unknown Impacts The next quarterly update may provide additional data to indicate the longer-term impacts of COVID-19. Questions?Thank You.