HomeMy WebLinkAbout20 - Third Quarter Budget UpdateQ �EwPpRT
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FROM:
CITY OF
NEWPORT BEACH
City Council Staff Report
June 14, 2022
Agenda Item No. 20
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
Scott Catlett, Finance Director/Treasurer - 949-644-3123,
scatlett@newportbeachca.gov
PREPARED BY: Shelby Burguan, Budget Manager
sburguan@newportbeachca.gov
PHONE: 949-644-3085
TITLE: Third Quarter Budget Update
ABSTRACT:
The Finance Department prepares quarterly financial reports to review in detail the status
of revenues and expenditures for the City of Newport Beach (City) General Fund and to
identify any concerning budgetary trends in other City funds. This report contains
information on revenues, expenditures, and the estimated fund balance for the third
quarter of Fiscal Year 2021-22.
This third financial report of Fiscal Year 2021-22 provides an analysis of the financial
activity of the City for the months of July 2021 through March 2022. Based on information
available at the end of the third quarter, staff has made positive adjustments to year-end
projected revenues and preliminary expenditure savings have been identified that should
result in a healthy year-end budget surplus. Year-to-date expenditure budget
adjustments are fully offset by the additional projected revenues.
RECOMMENDATION:
a) Determine this action is exempt from the California Environmental Quality Act (CEQA)
pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because
this action will not result in a physical change to the environment, directly or indirectly;
b) Approve Budget Amendment No. 22-057, adjusting revenue estimates and
expenditure appropriations for the Fiscal Year 2021-22 budget as further outlined in
this report; and
c) Receive and file the attached report of budget amendments for the third quarter.
20-1
Third Quarter Budget Update
June 14, 2022
Page 2
DISCUSSION:
Economic Overview
Key economic indicators such as unemployment, taxable sales, and assessed property
values continue to improve, which is indicative of the recent robust improvement to the
economy. While recent trends in inflation have caused concern in the broader economy
and financial markets, the City is well -positioned to weather any short-term increase in
inflation thanks to the related increase in many of the City's revenues such as sales tax
and transient occupancy tax as prices increase, and having long-term labor contracts in
place with most of the City's employee associations.
The economy is expected to continue to grow through the remainder of the fiscal year. It
is likely that the hardest hit industries will continue to see the strongest recovery as a
return to normal consumer behavior spurs further growth in sales associated with
restaurants, hotels, and general consumer goods purchased in brick -and -mortar
establishments.
General Fund Revenues
Overall General Fund revenue growth has outpaced projections generated by the City's
consultants and staff last spring that were incorporated into the adopted Fiscal Year 2021-
22 budget. Growth in sales tax and transient occupancy tax has been the most
pronounced, but growth in many other areas has contributed to a significant projected
increase in General Fund revenues of $19.2 million versus the adopted budget. Of note,
sales tax in the categories hardest hit by the pandemic (brick -and -mortar businesses and
restaurants and hotels) has now surpassed the record -high levels seen just prior to the
pandemic's onset, and transient occupancy tax is now projected to exceed the pre -
pandemic high by year-end.
The following table summarizes the changes to projected General Fund revenues versus
the adopted budget for Fiscal Year 2021-22. Details follow highlighting the reasons for
the material variances.
Fiscal Year 2021-22 Proiected General Fund Revenues
Property Taxes
$ 119,157,540
$ 122,229,980
$ 123,449,469 $
1,219,489
1.0%
Sales Tax
38,956,275
40,275,670
45,392,567
5,116,897
12.7%
Transient Occupancy Tax
16,886,197
19,027,493
25,573,145
6,545,652
34.4%
Other Taxes
12,849,340
10,815,117
12,824,996
2,009,879
18.6%
Service Fees & Charges
18,264,952
19,046,329
20,010,449
964,120
5.1%
Parking Revenue
7,074,853
5,681,942
5,989,448
307,506
5.4%
Licenses and Permits
5,133,399
5,106,646
5,106,646
-
0.0%
Property Income
5,115,255
5,044,403
5,922,927
878,524
17.4%
Fines & Penalties
4,012,568
3,292,102
3,379,886
87,784
2.7%
Intergovernmental
5,175,738
1,760,934
3,574,265
1,813,331
103.0%
Investment Earnings
1,598,624
1,112,200
1,112,200
-
0.0%
Misc Revenues
1,359,034
734,148
1,034,151
300,003
40.9%
Total Revenues
$ 235,583,776
$ 234,126,964
$ 253,370,149 $
19,243,185
8.1%
20-2
Third Quarter Budget Update
June 14, 2022
Page 3
Property Tax - Property taxes are the City's single largest General Fund revenue and
represent approximately 50% of all General Fund revenues. As these revenues are
primarily dependent on the assessed valuation established in January of 2021, there is
typically very little variance seen from the original budget as the year progresses. The
growth rate for Fiscal Year 2021-22 was smaller than what has been seen in recent years,
primarily due to the lower 1.036% CPI factor. For Fiscal Year 2020-21, secured property
tax payments came in strong, $1.2 million over budget, which is an indication of timely
property tax payments and higher valuations. Based on the higher prior year revenues
and the most recent data shared by the City's property tax consultant, staff has increased
the property tax revenue estimate for Fiscal Year 2021-22 by $1.2 million to $123.4
million.
Projections for Fiscal Year 2022-23 property tax revenues from the City's property tax
consultant reflect a 6.5% increase in assessed values in the year ahead. This strong
growth is a result of the CPI factor returning to the maximum 2.0% allowed and adding
$1.2 billion to the assessed valuation, as well as continued strong property sales activity
and price appreciation adding $2.8 billion to the assessed valuation. The City's total
assessed valuation for Fiscal Year 2022-23 is now projected to grow from $64.8 billion to
$69.0 billion.
Sales Tax - The second largest funding source for the General Fund is sales tax revenue,
making up more than 15% of General Fund revenues. The City's sales tax base is largely
generated from three industry categories — autos and transportation, general consumer
goods, and restaurants and hotels. Most of these industries are also heavily impacted by
tourism.
Because sales tax revenues are remitted to the City by the State of California (State)
several months after they are paid by consumers, information on which to report on for
the third quarter reflects actual receipts through the end of the December 2021. However,
based on the strong growth seen in recent quarters, and the latest projections from the
City's sales tax consultants, staff has increased the sales tax revenue estimate for Fiscal
Year 2021-22 by $5.1 million to $45.4 million, an increase of 12.7%.
This increase results from two primary drivers. First, while auto sales have slowed due to
inventory shortages, price increases have more than offset this decline and have resulted
in strong growth in this category of sales tax revenues of 13.3% on a quarter over prior
year quarter basis in the October through December quarter. Second, revenues from
brick -and -mortar retail establishments and restaurants and hotels have now surpassed
the pre -pandemic high as consumer behavior has largely returned to normal. These
revenues grew at rates of 35.8% and 53.9%, respectively, versus the same prior year
quarter. Also factoring into the strong growth is revenue from fuel and service stations,
with 54.9% growth versus the same prior year quarter due to higher fuel prices and higher
demand. Overall revenue was up 19.6% versus the same prior year quarter, leading to a
year-end projection of 14.3% growth for the full fiscal year versus the prior fiscal year.
20-3
Third Quarter Budget Update
June 14, 2022
Page 4
The outlook for sales tax revenues remains positive despite supply chain, pricing, and
labor concerns, and the City expects to see continued growth in the years ahead.
Transient Occupancy Tax (TOT) — The City has seen a steady rebound and comeback
for TOT revenues as the effects of the pandemic receded. Initially, the TOT budget for
the current fiscal year was developed in anticipation of full recovery of TOT revenues not
occurring until the end of Fiscal Year 2022-23. However, staff's revised projection in the
second quarter budget update estimated an increase in the budgeted revenues of
$6.5 million to $25.6 million, an increase of 34.4%. Staff's analysis has confirmed the
projection provided with the second quarter report and there is no further update to this
projection at this time.
Two factors are causing this significant increase in the projection. First, revenue from
short-term lodging businesses, which grew throughout the pandemic, is at a record high
level. Second, many hotel properties are reporting record high TOT receipts and have
been doing so for multiple consecutive months. While occupancy levels have not returned
to pre -pandemic levels, they are slowly increasing. This lag in occupancy levels has been
largely offset by higher daily room rates, resulting in hotel TOT revenues that are
projected to approach the pre -pandemic high this fiscal year. When taken together, the
strong growth in residential TOT makes up for the slightly lower hotel TOT projection and
the two in total are now projected to result in a record year for TOT revenues for the City.
The year-end projected revenues would exceed the prior year by 51.4% and the Fiscal
Year 2018-19 record by $876,000.
Data provided by Visit Newport Beach illustrates these very positive trends:
NEWPORT
OF - •2022)
405
9385 $369.30
W 365 - -
$335.55 $334.10 $309.93 $333.92 $336.60
345 $315.15 $329.02 .................
325 $313.70 $312.46 14 6 $316.90
.............
w 305 .........
LU
285 $307.90 $316.95
265 88.79—117.13 190. .........
245 5:85 $263:03 $274.37 $�fi8 �a $274.78 ... ... .$287.72-
j 225 $255.43
Q 12-FEB 19-FEB 26-FEB 5-MAR 12-MAR 19-MAR 26-MAR 2-APR 9-APR 16-APR 23-APR 30-APR
tTHISYEAR fLASTYEAR
20-4
Third Quarter Budget Update
June 14, 2022
Page 5
75 6B.2 %
d 70 66.7 % 64.0 % ..... 65.2 °%..
62.3% 61.7% 60.8%
60 54.7 °% 56.6 % 56.5 °
y 55 9.2050
............ ....... ...
45 53.3..
� 40 33.2 % .... % ......................... ._.42.7 % 44.5 % 44.4 %
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...................................................... .
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w 12-FEB 19-FEB 26-FEB 5-MAR 12-MAR 19-MAR 26-MAR 2-APR 9-APR 16-APR 23-APR 30-APR
w ♦THIS YEAR (LAST YEAR
3
While the Newport Beach Marriot remains under renovation through the end of the month,
it has now reopened as VEA Newport Beach with expanded meeting space, higher room
rates, and a full complement of rooms available that had not been usable during the
renovation process this past year. Staff has conservatively not included an impact in the
TOT revenue projection from the changes to the hotel, which should result in a positive
variance beyond the current projection once the hotel is fully open. The Fashion Island
Hotel remains closed, but is expected to reopen in the Summer of 2023 following a sale
and renovation as the Pendry Newport Beach. Similarly, because the timing of the
Pendry's opening is uncertain, staff has not included any revenue from the hotel in the
projection. These reopening's, combined with the expected return of more business
travelers, are anticipated to have additional positive impact on the City's TOT revenues.
The outlook for TOT revenues continues to exceed expectations, and the reopening of
the VEA and Pendry hotels with significant renovations and higher room rates presents
further opportunity for growth. Projections anticipate 8.7% growth in the fiscal year ahead
as the effects of the pandemic recede and trends return to more normal behavior.
All Other Revenue — This category includes all other revenue sources other than the top
three (property tax, sales tax, and TOT). All Other Revenue is made up of the following:
• Other Taxes — real property transfer taxes, business license taxes, marine charter
taxes, and franchise fees.
• Service Fees and Charges — plan check fees, recreation classes, emergency
medical services fees, and numerous other cost -of -service fees.
• Parking Revenue — all General Fund related metered parking fees that are
assessed throughout the various parking zones of the City.
• Licenses and Permits — fees charged to process building related permits, street
closure permits, dog licenses, and police tow franchise fees.
• Property Income — City owned and managed income -producing properties, long-
term ground leases to concessions, restaurants, hotels and other businesses and
organizations, and rental of City facilities to the public.
20-5
Third Quarter Budget Update
June 14, 2022
Page 6
• Fines and Penalties — parking citation fines collected by the City, administrative
citation fines, fines remitted to the City from the County of Orange (County) for
vehicle code violations, and false alarm penalties.
• Intergovernmental Revenues — federal, state, and local grant revenues, which
includes, but is not limited to, the City's portion of the 1/2 cent sales tax revenue
paid to the County for public safety, state mandate reimbursements,
reimbursement for strike teams sent to assist with fires, and revenue sharing with
the County under the Waste Disposal Agreement.
• Investment Earnings — revenue generated from the investment of City funds.
• Miscellaneous Revenues — restricted revenue, damage to City property, bad debt,
donations and contributions, non -operating revenues such as proceeds from the
sale of materials and equipment, and other miscellaneous revenues.
Growth in other revenues as a whole is projected to be $5.6 million above the adopted
budget or 10.7%. Primary drivers of this growth include:
• Service fees and charges revenues are projected to exceed the adopted budget
by $1.0 million primarily due to increased revenue received from recreation
fee -based classes and the Junior Lifeguard program as discussed in more detail
in the prior quarter's financial report.
• Property income revenues are projected to exceed the adopted budget by
$0.9 million, primarily due to increased percentage -based rent revenues from the
Lido House Hotel lease due to the hotel's increased revenues.
• Intergovernmental revenues are projected to exceed the adopted budget by
$1.8 million, primarily due to adjustments related to Fire Department mutual aid
reimbursements and SB-2 Permanent Local Housing Allocation grant funds, as
discussed in the first quarter's financial report in more detail.
• Property transfer tax revenues are projected to exceed the adopted budget by
$2.0 million due to the strong sales activity discussed earlier in this report.
Governmental accounting standards require the City to adjust the value of the City's
investments to market value. Because the City normally holds investments to maturity
and receives the full value of securities regardless of market value fluctuations, these are
paper -only gains and losses that net to $0 over time. The impact of the gains and losses
associated with the change in the value of the City's investments is recorded at year-end
as an addition to or subtraction from investment income. Because of the current volatile
and rising interest rate environment, staff anticipates a significant negative adjustment at
June 30, 2022, to reflect the fair value of the City's investments. If staff recorded the entry
on April 30, 2022, a $2.9 million negative revenue would be recorded in the General Fund
to record the fair value adjustment. Staff does not yet know what the required adjustment
will be as of June 30, 2022, which could be higher or lower than the April 30 amount.
Staff will advise the Finance Committee and the City Council in the fourth quarter report
of the final amount of the adjustment, but it seemed appropriate to mention it now as it
will likely be material and will reduce the projected surplus as reported later in this report.
20-6
Third Quarter Budget Update
June 14, 2022
Page 7
General Fund Expenditures
The Fiscal Year 2021-22 General Fund revised expenditure budget totals $238.9 million.
The year-to-date spending trends in the current fiscal year are generally consistent with
prior years and do not indicate any cause for concern. Existing appropriations are on
target to fund all current operational expenditures and staff are currently projecting sizable
year-end budget savings comparable to what has been generated in prior fiscal years.
The table below summarizes the year-to-date changes to the adopted expenditure budget
for Fiscal Year 2021-22, as well as projected expenditure savings by budget category.
Details follow highlighting the reasons for the material variances. As promised in the
second quarter report, budget savings has been analyzed and revised based on new
information. Based on trends seen in prior years, additional budget savings are
anticipated to materialize as the fiscal year progresses.
Fiscal Year 2021-22 Projected General Fund Expenditures
Salary & Benefits
$151,713,101
$159,393,983
$155,078,233
$ 4,315,751
2.7%
Contract Services
24,702,901
27,262,619
26,026,031
1,236,587
4.5%
Grant Operating
600,000
926,490
926,490
-
0.0%
Utilities
3,011,315
3,219,168
3,806,096
(586,928)
-18.2%
Supplies & Materials
3,739,730
4,425,598
4,345,944
79,654
1.8%
Maintenance & Repair
12,640,923
13,497,005
13,108,890
388,115
2.9%
Travel & Training
814,868
833,079
687,180
145,899
17.5%
General Expenses
2,130,552
2,303,168
2,332,914
(29,746)
-1.3%
Internal Svc Charge
25,078,890
25,093,732
25,093,732 -
0.0%
Risk Management
750,915
750,915
750,915 -
0.0%
Capital Expenditures
780,438
1,145,810
1,145,810 -
0.0%
Total Expenditures
$225,963,632
$238,851,567
$233,302,236 $ 5,549,331
2.3%
Significant expenditure budget variances are as follows:
The revised salary and benefits budget totals $159.4 million, an increase of
$7.7 million over the adopted budget. The increase is primarily due to the
appropriation of $5.0 million from Fiscal Year 2020-21 year-end budget surplus as
an additional discretionary payment to CalPERS to further reduce the City's
unfunded pension liability. The remaining $2.7 million relates to recently approved
contracts with the majority of the City's employee associations. The City does not
budget for unknown labor costs, which requires mid -year appropriations for
negotiated salary and benefit increases in the year in which new labor contracts
are negotiated. While the budget for the current year did include a $2.0 million
vacancy factor, additional salary and benefit savings beyond the vacancy factor of
$4.3 million are currently projected.
20-7
Third Quarter Budget Update
June 14, 2022
Page 8
• Increases to the contract services budget relate to a variety of routine mid -year
adjustments previously approved by the City Council, including $0.6 million added
to the contract instructors' budget for Recreation and Senior Services that is fully
offset by higher revenues, $0.4 million for the Be Well OC program, $0.3 million
for the Medical Intergovernmental Transfer Program that is fully offset by higher
revenues, and appropriations offsetting several donations. Based on staff's most
recent budget meetings with City departments, contract services savings of $1.2
million are currently projected.
• Staff identified and reported on an issue with the City's recent budgeting for
utilities. A portion of this issue was addressed with a budget amendment approved
by the City Council in the first quarter. However, additional overages are now
apparent. Staff is evaluating this issue and will be making adjustments in the Fiscal
Year 2022-23 budget to address it. As budget savings in other expenditure
categories are anticipated to fully offset the projected $0.6 million overage, staff is
not recommending a further adjustment to the utilities budget at this time.
• Due to inflated prices for gasoline, the category titled General Expenses is
projected to go over budget by just under $30,000. As budget savings in other
categories offset this overage, staff is not recommending an adjustment to the fuel
budgets at this time.
Staff is also requesting approval of a budget amendment to obtain authorization for
increasing revenues and expenditures related to overtime associated with mutual aid to
other organizations for fire strike teams.
On October 26, 2021, the City Council approved $31.0 million of recommended
appropriations from prior year unrestricted General Fund resources as follows:
1. CaIPERS Unfunded Liability — $5.0 million to bring the City's annual unfunded
liability contribution to CalPERS up from $35 million to $40 million, consistent with
recent years and the recommendation of the Finance Committee.
2. Facilities and Infrastructure Replacement Liabilities — $10.5 million toward
additional contributions to long-term infrastructure liabilities within the Facilities
Financial Plan and Harbor and Beaches Capital Improvement Program (CIP).
Funds were set aside, with specific allocations being recommended as part of the
upcoming Fiscal Year 2022-23 budget process.
3. CIP and Neighborhood Enhancements — $15.5 million toward the Fiscal Year
2022-23 capital improvement program, to include neighborhood enhancement
projects. Funds were set aside with specific allocations being recommended as
part of the upcoming Fiscal Year 2022-23 budget process.
Other than the previously discussed appropriation toward the City's CaIPERS unfunded
liability, the remainder of these appropriations are reflected in the budget as transfers out
of the General Fund.
20-8
Third Quarter Budget Update
June 14, 2022
Page 9
General Fund Sources, Uses, and Projected Surplus
As a result of the strong revenue growth seen year-to-date and projected continued strong
revenue growth through the end of the fiscal year, a budget surplus is anticipated based
on the additional revenues alone. Projected expenditure savings, which based on prior
year trends will likely exceed what is currently projected, will add to that surplus. While
this is all good news, the year is only 75 percent complete and staff remains cautious.
Staff will continue to revise these projections as the year progresses, with a final update
to be provided to the Finance Committee and City Council following the conclusion of the
fiscal year.
The table below illustrates the prior year sources and uses of funds as compared to the
adopted budget, the revised budget, and the projected year-end results:
Fiscal Year 2021-22 Projected General Sources, Uses, and Budget Surplus
BEGINNING UNRESTRICTED FUND BALANCE $24,081,225 $31,036,884 $ 31,178,957 $ 31,178,957 $ 142,073 0.5%
SOURCES:
Operating Revenues
235,934,635
234,126,964
253,370,149
253,370,149
19,243,185
8.2%
Less: Restricted Revenues
(957,206)
(1,128,513)
(1,128,513)
(1,128,513)
-
0.0%
Prior Year Resources Carried Forward
2,075,632
-
3,072,666
3,072,666
3,072,666
---
Release of Restricted Funds
2,403,303
1,220,000
1,220,000
1,220,000
-
0.0%
Transfers In from Other Funds
21,526,628
11,977,157
11,977,157
10,492,133
(1,485,024)
-12.4%
TOTAL SOURCES
260,982,992
246,195,608
268,511,459
267,026,435
20,830,827
8.5%
USES:
Operating Expenditures
220,647,754
225,963,632
238,851,567
233,302,236
7,338,604
3.2%
Transfers Out
27,467,575
20,200,000
47,030,300
47,030,300
26,830,300
132.8%
Resources Carried Forward to FY 2021-22
3,072,666
-
-
-
-
---
Addition to 25% Contingency Reserve
2,697,265
-
-
-
-
---
TOTAL USES
253,885,260
246,163,632
285,881,867
280,332,536
34,168,904
13.9%
ENDING UNRESTRICTED FUND BALANCE
$31,178,957
$31,068,860
$ 13,808,549
$ 17,872,856
$ (13,196,004)
-42.5%
CHANGE IN FUND BALANCE
$ 7,097,732
$ 31,976
$(17,370,408)
$(13,306,101)
$(13,338,077)
As can be seen in the table above, even with the sizable appropriations earlier this year
that allocated three prior years' budget surpluses, current projections now reflect a $17.9
million budget surplus for the current fiscal year. As discussed in prior quarterly reports,
it is quite possible that additional budget savings will be identified in the final quarter of
the year that may increase the surplus. However, it should again be noted that the City's
financial situation can change based on economic forces outside of our control. Prudence
is therefore dictated until the year is complete and the actual budget surplus is calculated.
One item of note in the above table, is that the transfers in from other funds has decreased
by $1.5 million. This is due to an updated projection of the activity in the Tidelands
Operating Fund, which will require a higher subsidy from the General Fund than was
anticipated when the budget was developed.
20-9
Third Quarter Budget Update
June 14, 2022
Page 10
In January, staff brought a report to the Finance Committee to recommend changing the
budget presentation format for the Tidelands Operating Fund. That change has been
incorporated into the Fiscal Year 2022-23 Proposed Budget, but the current year's budget
retains the old format, reflecting the difference between the cost allocation plan charges
and the subsidy revenue to the Tidelands Operating Fund as a net transfer into the
General Fund. The primary reasons for the projected $1.5 million reduction to the transfer
in are that 1) the historical methodology for calculating the subsidy when the budget was
presented to the City Council did not factor in planned capital expenditures from the
Tidelands Operating Fund and utilized a calculation of available fund balance that did
not always take all variables impacting the available balance into account and 2) the
historical methodology utilized in these quarterly reports did not include the impact of
Tidelands Operating Fund budget amendments in the current fiscal year that draw from
unappropriated fund balance, which must be backfilled by the General Fund. Staff has
identified these issues as part of the ongoing Fiscal Year 2022-23 budget process and
has implemented revisions to the budget process and the quarterly reporting process to
properly account for these variables in the Tidelands Operating Fund that indirectly
impact the General Fund through an increase in the subsidy required. While these
variances were realized at year-end in prior fiscal years, they will now be accounted for
and recognized on a timelier basis. The projection of the year-end surplus for the General
Fund will therefore be more accurate in the future as it relates to these Tidelands issues.
Lastly, as discussed in the revenues section of this report, the impact from adjusting the
value of the City's investments to fair value is anticipated to negatively impact revenues
by a currently unknown amount. As of April 30, 2022, this amount is $2.9 million, so the
actual surplus is likely to be reduced to $15.0 million based on current information.
Other Funds
Staff has evaluated the fiscal condition of the City's other major operating funds
(Tidelands, Water, and Wastewater). An analysis of the budget performance for the Water
and Wastewater funds through the third quarter of this fiscal year indicates that no budget
adjustments are necessary and variances between budgeted and actual amounts are
within reason.
An analysis of the Tidelands fund has demonstrated that a higher than budgeted subsidy
will be necessary to fund the current activity in the fund. There is no budgetary impact
due to the current presentation format of the Tidelands Fund, but this is reflected in the
General Fund sources and uses as a reduced transfer in as previously discussed.
Tidelands Operating Fund Activity Projected
Available Beginning Fund Balance 2,390,852
Projected Revenues 12,691,599
Total Sources 15,082,451
Operational Expenses (3,237,680)
Capital Improvement Projects (3,887,269)
Cost Allocation Plan (17,300,724)
Total Uses (24,425,672)
Deficit (Subsidy) (9,343,221)
Projected Net Increase to GF (CAP less Subsidy) 7,957,503
Budgeted Net Increase to GF (CAP less Subsidy) 9,442,529
Impact on General Fund (1,485,026) 20-10
Third Quarter Budget Update
June 14, 2022
Page 11
Quarterly Report of Budget Amendments
Included in this report as Attachment B is the quarterly listing of Budget Amendments that
was previously provided to the Finance Committee. This listing is also provided to the City
Council as part of each quarterly budget update in an effort to enhance transparency.
FISCAL IMPACT:
As a result of approval of the Budget Amendment (Attachment A) included with this report,
revenue estimates will be adjusted upward by $255,276 and $255,276 will be
appropriated to the expenditure account listed in the Budget Amendment.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not
result in a direct or reasonably foreseeable indirect physical change in the environment)
and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA
Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no
potential for resulting in physical change to the environment, directly or indirectly.
NOTICING -
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
ATTACHMENTS:
Attachment A — Budget Amendment No. 20-057
Attachment B — Third Quarter Budget Amendments
20-11
Attachment A
Budget Amendment No. 20-057
20-12
Q SEW PpRr
City of Newport Beach
BUDGET AMENDMENT
`q`,F -111 - 2021-22 BA#: 22-057
Department: Finance
Requestor: Scott Catlett
ONETIME: ❑� Yes ❑No
Approvals
❑ CITY MANAGER'S APPROVAL ONLY
Finance Director: Date �
FZ COUNCIL APPROVAL REQUIRED City Clerk: Date
EXPLANATION FOR REQUEST:
To increase revenue estimates and expenditures appropriations relating to the fiscal year 2021-22 quarter three staff ❑ from existing budget appropriations
report.
❑✓ from additional estimated revenues
❑ from unappropriated fund balance
REVENUES
Fund #
Org
Object Project
Description
Increase or (Decrease) $
010
01040401
431245
FIRE OPERATIONS - CAL OES
255,267.00
Subtotal
$ 255,267.00
EXPENDITURES
Fund #
Org
Object Project
Description
Increase or (Decrease) $
010
01040401
713010
FIRE OPERATIONS - OT STRIKE TEAMS & MUTUAL AID
233,183.00
010
01040404
713010
EMERGENCY MEDICAL SERVICES
- OT STRIKE TEAMS & MUTI
22,084.00
Subtotal
$ 255,267.00
FUND BALANCE
Fund #
Object
Description
Increase or (Decrease) $
010
300000
GENERAL FUND - FUND BALANCE CONTROL
Subtotal
$
No Change In Fund Balance
20-13
Attachment B
Third Quarter Budget Amendments
20-14
City of Newport Beach
Fiscal Year 2021-22 Budget Amendments
Quarter Ending March 31, 2022
Net Effect on Fund Balance
BA #
Date
Amendment Type
Fund
Revenues Expenditures
Increase/(Decrease)
Department
Explanation
034
01/11/2022
City Council
TIDE & SUBMERGED LANDS FUND
- 85,765.00
(85,765.00)
Public Works
To increase expenditure appropriations from unappropriated
Tidelands Maintenance Fund Balance to fund Newport Bay Water
Wheel.
035
01/11/2022
City Council
CONTRIBUTIONS FUND
28,717.00 28,717.00
Public Works
To increase revenue and expenditure budgets to accept and
appropriate funds from Lumen Technologies, Orange County
Water District, and Orange County Sanitation District for the
Jamboree Road Pavement Rehabilitation and Reclaimed Water
Conversion project.
036
01/11/2022
City Council
GENERAL FUND
- 312,000.00
(312,000.00)
Human Resources
To increase expenditure appropriations for a lump sum payment to
............................................................................................................................................................................................................................................
TIDE &SUBMERGED LANDS FUND
2,000.00
(2,000.00)
each member of CEA and Prof -Tech in accordance with the Side
Letter of Agreements.
WATER ENTERPRISE FUND
....................................................................................................................................................................................................................................................................................
IT ISF
5,000.00
25,000.00
(5,000.00)
(25,000.00)
037 01/25/2022 City Council GENERAL FUND
310,358.65
(310,358.65)
Human Resources To increase salary & benefit appropriations to fund the new MOU
............................................................................................................................................................................................................................................
TIDE &SUBMERGED LANDS FUND
4,918.49
(4,918.49)
and lump sum payments in accordance with the Agreement for the
....................................................................................................................................................................................................................................................................................
members of Key and Management (K&M).
WATER ENTERPRISE FUND
- 12,841.96
(12,841.96)
....................................................................................................................................................................................................................................................................................
WASTEWATER ENTERPRISE FUND
2,570.04
(2,570.04)
....................................................................................................................................................................................................................................................................................
EQUIPMENT FUND
1,787.09
(1,787.09)
....................................................................................................................................................................................................................................................................................
IT ISF
11,137.12
(11,137.12)
038 01/25/2022 City Council GENERAL FUND
148,523.31
(148,523.31)
Human Resources To increase salary & benefit appropriations to fund the new MOU
....................................................................................................................................................................................................................................................................................
WATER ENTERPRISE FUND
69,835.52
(69,835.52)
and lump sum payments in accordance with the MOU Agreement
....................................................................................................................................................................................................................................................................................
for the Newport Beach Employees League (League).
WASTEWATER ENTERPRISE FUND
- 24,669.39
(24,669.39)
....................................................................................................................................................................................................................................................................................
EQUIPMENT FUND
- 14,897.30
(14,897.30)
039
01/25/2022
City Council
GENERAL FUND
12,546.88
(12,546.88)
Human Resources
To increase salary & benefit appropriations to fund the new
Employment Agreement with the City Manager.
040
02/22/2022
City Council
GENERAL FUND
31,764.00
Finance
To increase appropriations relating to the fiscal year 2021-22
....................................................................................................................................................................................................................................................................................
IT ISF
quarter two staff report.
041
02/08/2022
City Council
GENERAL FUND CAPITAL PROJECTS
- 77,969.00
(77,969.00)
Public Works
To increase expenditure appropriations from the unappropriated
General Fund Capital Improvement Program fund balance to fund
the Dog Park Refurbishment project.
042
02/09/2022
City Manager
GENERAL FUND
1,000.00 1,000.00
Library
To increase revenue estimates and expenditures appropriations by
accepting a donation from a library patron to purchase materials for
the Librar/s collection.
043
03/08/2022
City Council
GENERAL FUND
25,000.00 25,000.00
Library
To increase revenue estimates and expenditures appropriations by
accepting a donation from Newport Beach Library Foundation to
purchase materials for the children's library collection.
044
02/16/2022
City Manager
GENERAL FUND
- 31,250.00
Finance
To transfer existing expenditures appropriations in financial
planning from part time salaries to professional services.
045
03/08/2022
City Council
GENERAL FUND
48,148.57
(48,148.57)
Human Resources
To increase salary & benefit appropriations to fund the new MOU
TIDE & SUBMERGED LANDS FUND
4,253.24
(4,253.24)
for the Part Time Employees Association.
ENVIRONMENTAL LIABILITY FUND 540.89 (540.89)
..........................................................................................................
WATER ENTERPRISE FUND - 599.08 (599.08)
WASTEWATER ENTERPRISE FUND - 353.96 (353.96)
.......................................................................................................... ......
EQUIPMENT FUND 90.81 (90.81)
COMPENSATED ABSENCE FUND - 3,562.09 (3,562.09)
IT ISF 87.13
046 03/08/2022 City Council NEIGHBORHOOD ENHANCEMENT - 378,566.00 (378,566.00) Public Works To increase expenditure appropriations to fund the Neighborhood
Enhancement CIP account from the unappropriated Neighborhood
Enhancement fund balance.
047 03/22/2022 City Council GENERAL FUND 5,303.32 (5,303.32) City Attorney To increase salary & benefit appropriations to fund the new
Employment Agreement with the City Attorney.
20-15