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HomeMy WebLinkAbout19E - RECEIVE AND FILE 1ST QRT UPDATEREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: NOVEMBER 17, 2020 TITLE: RECEIVE AND FILE FISCAL YEAR 2020-2021— FIRST QUARTER UPDATE /s/ Kristine CITY MANAGER CLERK OF COUNCIL USE ONLY: ❑ As Recommended ❑ As Amended ❑ Ordinance on 1sl Reading ❑ Ordinance on 2od Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER RECOMMENDED ACTION Receive and file Fiscal Year 2020-2021 First Quarter Update (Exhibit 1). DISCUSSION The purpose of this report is to provide an early look at fiscal year activity. The fiscal year begins in July and ends in June. Many revenues are received two months after the period of activity. Therefore, when analyzing the books as of September 30,2020, it is normal to see low revenue received to date. Expenditures to date will be closer to one -quarter of the annual budget, as 60% of the budget is related to employee compensation paid twice monthly. The update focuses on the General Fund, as it is the primary operating fund of the City. However, this year's first quarter update includes restricted federal CARES (Coronavirus Aid, Relief, and Economic Security) Act spending, due to its importance to current City operations and an update on the Parking Enterprise, which has been impacted by the pandemic. Finally, staff has included the full-time funded position vacancy report as of September 30, 2020. General Fund Revenues for FY 2020-2021 Sales Tax (Bradley Burns and Measure X): Sales tax allocations are received monthly. Within each quarter, there are two advance payments based on the state's estimates and one true -up payment based on actual sales tax performance. As of September 30, only one monthly advance payment had been received for both Bradley Burns and Measure X. The latest "conservative" estimate from the City's sales tax consultant indicates Bradley Burns revenue may exceed the original estimate by $0.9 million, and Measure X revenue may exceed the original estimate by $1.3 million. Staff will continue to monitor the revenue, including actual first quarter results to be received in late November, and may propose an adjustment to Sales Tax estimates at mid -year. Property Tax, Property Tax in lieu of VLF, and Residual Property Tax: Approximately two- thirds of Property Tax (the City's 17% share of the base 1 % levy) is collected during the months of December and April. The entire allocation of Property Tax in lieu of VLF is received in two equal 19E-1 Receive and file Fiscal Year 2020-2021 General Fund First Quarter Update November 17, 2020 Page 2 installments in January and May. Residual Property Tax is allocated to the City from the Redevelopment Property Tax Trust Fund after all obligations of the former Redevelopment Agency are settled, and payments are typically received in December and May. Therefore, an update on the Property Tax revenue will be provided in the Mid -Year Report scheduled for February 2021. Hotel Visitors' Tax (HVT): Due to the pandemic, it is no surprise HVT collections have decreased significantly. Only $0.8 million or 13.5% of the annual estimate was collected for the first quarter. Once we have second quarter results, we may reduce our revenue estimate at mid -year. Future HVT revenue will increase after the pandemic, and after several hotels in development open for business. Business License Tax (BLT): The BLT revenue is on track to meet the $9.2 million annual estimate. An additional BLT Collector was added to staff, and our revenue division has been able to proactively improve collections, including making payment arrangements with small businesses suffering during the pandemic. Peak business license periods occur in the third and fourth quarters of the fiscal year, when approximate 80% of the annual BLT is collected. Utility Users Tax (UUT): The UUT is a 5.5% tax on the following utilities: electric, gas, water, and telecommunications. Currently, the electric, gas, and water utilities are trending slightly above or below last year's first quarter results. However, the telecommunications utility users' tax is nearly $0.1 million less than last year. This appears to be primarily due to service providers readjusting downwards their apportionment of taxable to nontaxable sales of the telecommunications services. The City has issued a Request for Proposal (RFP) for UUT revenue auditing. Initial UUT revenue for FY20-21 is tracking similar to FY19-20, yet we expected an increase due to residents spending more time at home. Staff will pursue the audits and continue to monitor activity, and we may decrease the revenue estimate at mid -year. Cannabis Tax Revenues: Adult -Use Retail Cannabis revenues are projected to meet budget and the current amount of $2.7 million represents two months of receipts of all cannabis revenues. There are 27 Adult -Use Retailers, 19 Medical Cannabis Dispensaries and 13 Cannabis Distributors licenses. The growth of the Adult -use retail sector continues to impact Medical Cannabis revenue which has been gradually declining and therefore projections for fiscal year 2020-2021 have been adjusted. Jail Revenue: Jail revenue represents only one month's receipts of $1.2 million. An additional $1.3 million for August and $1.2 million for September has been billed and is expected to be received during the second quarter. Additionally, this revenue is continually being monitored throughout the year due to flucturations in the average daily population (ADP) from month to month. Permits and Plan Check: Current permit and plan check revenues total $0.9 million. While plan check revenues are similar to last year, permit revenues are $0.2 million less than last year. Staff will continue to monitor the development activity and the related revenues and provide updates during the mid -year report. Paramedic Service Charges: The City charges for paramedic services such as basic/advanced life support and transport services provided to the public. The billing for these services is managed 19E-2 Receive and file Fiscal Year 2020-2021 General Fund First Quarter Update November 17, 2020 Page 3 by a third -party consultant to recoup the cost of these services and revnues are remitted to the City. Revenues for the first quarter are $1.3 million and is $0.6 million less than the prior year. This decrease may be attributable, in part, to less service calls during the currnet pandemic. Parking Fines: On March 15, 2020, the City had temporarily suspended the enforcement of the parking fines related to street sweeping during the pandemic. The enforcement of these fines resumed on June 1, 2020 and continue into fiscal year 2020-2021. Parking Fines revenue for the first quarter is $1.0 million and exceeds the prior year's first quarter revenue of $0.9 million General Fund Expenditures for FY 2020-2021 Overall, General Fund expenditures are at 24.2% of budget. With one exception, each department is within the expected range of spending for the first quarter. It should be noted the first quarter activity includes four monthly payments for fire services, as the City pays one month in advance. There are some costs of City Council directed litigation that were not budgeted, which is driving higher than expected spending in the City Attorney's Office. Staff will likely propose a budget increase during the mid -year update. Federal CARES Act Spending The City received $28.6 million from the state and $2.9 million from the County. A small portion of the allocation ($0.7 million) was spent in FY19-20, and the City is on track to spend the remaining $31.8 milllion by December 30, as required by federal guidelines. The spending plan includes assistance for residents and businesses, outreach, testing, sanitization, protective supplies, and equipment for City facilities. To date, $22.1 million has been committed through expenditure, purchase order, or contracts. Highlights include the following: Funding for assistance programs related to families and businesses which include the following: o Utilities Assistance o Small Business Assistance o Childcare assistance o Rental assistance program for both landlords and tenants Utilize COVID-19 funding to offset increases in City administrative costs such workers compensation, unemployment, and telework capabilities. Sanitization of Parks (facilities & equipment), the Downtown (near homeless/businesses, etc.), and Right -of -Way which are the most affected areas related to COVID-19. Service is performed on a weekly basis through December 30, 2020. Constructed upgrades to the City's Emergency Operations Center (EOC). Provided Staff various forms of Personal Protective Equipment (PPE), signage, and shields to mitigate COVID-19. Assisted the homeless population with barriers, trailers, and rentals to assist in mitigating the spread of COVID-19. 19E-3 Receive and file Fiscal Year 2020-2021 General Fund First Quarter Update November 17, 2020 Page 4 Conducted extensive outreach efforts to notify the community of the various programs and services offered through the CARES Act State Spending plan, which includes but is not limited to the following: • Door-to-door visits in impacted communities targeting neighborhoods where the majority of COVID-19 positive tests are occurring: including providing PPE kits (masks, sanitizer, etc.) and marketing material of various assistance program(s). To date, the City has reached a majority of its impacted population. • Developed a Santa Ana CARES team mobile unit as part of its community engagement efforts providing quick/local access to testing, PPE kits, COVID-19 prevention efforts, and material advising of assistance programs. To date staff has reached a majority of its population and is scheduled to mobilize the CARES team through the end of November 2020. • Developed a "Community Mask" contest to increase awareness of face mask usage and its role in mitigating the spread of COVID-19. • Contracted with a third -party to offer a "tri-lingual' nurse hotline, fielding approximately three -hundred (300) monthly calls from residents, to provide nursing assistance. • City has assisted its most vulnerable population with facilitating quarantine housing, through a partnership with local hotels. Parking Enterprise Due to the pandemic, preliminary parking revenues for fiscal year 2019-2020 of $3.4 million were noticeably lower than budgeted. Similiarily, expenditures of $5.4 million were less than budget which in combination with the revenue results in a preliminary loss of $2 million. An update will be provided during the Mid -Year Report in February, and a budget amendment may be necessary. Full -Time Employee Position Vacancy Report The FY 2020-21 budget included funding for 1,224 positions. On September 15, 2020, the City Council approved an additional 10 Police Officer positions, partially funded by a temporary COPS grant. As of September 30, a total of 182 funded positions remain vacant (Exhibit 1). Of the 182 vacant positions, 47 are subject to the hiring freeze which provided over $5 million in savings in the current year budget. During the year, departments have been evaluating their operations to determine any potential savings that can be used to fund these positions and continue to provide essential city services. FISCAL IMPACT There is no fiscal impact associated with the receipt of this report. Submitted By: Kathryn Downs, CPA, Executive Director— Finance and Management Services Agency Exhibit: 1. Fiscal Year 2020-2021 First Quarter Update 19E-4 T m X W 0 i 0 N 0 cr H m H C) W CN W Q 0 z w C7 Q M, O � N cn O 1 W MO \W / Q. 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